Alternative cost flows—perpetual
P1
Date Activities Units Acquired at Cost Units Sold at Retail
Mar. 1 Beginning inventory . . . . . . . 50 units @ $50/unit
Mar. 5 Purchase . . . . . . . . . . . . . . . 200 units @ $55/unit
Mar. 9 Sales . . . . . . . . . . . . . . . 210 units @ $85/unit
Mar. 18Purchase . . . . . . . . . . . . . . . . . . 60 units @ $60/unit
Mar. 25 Purchase . . . . . . . . . . . . . . . 100 units @ $62/unit
Mar. 29 Sales . . . . . . . . . . . . . . . . . . 80 units @ $95/unit
Totals . . . . . . . . . . . . . . . . . 410 units 290 units
Required
1. Compute cost of goods available for sale and the number of units available for sale.
2. Compute the number of units in ending inventory.
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) specific identification
(Note: The units sold consist of 500 units from beginning inventory and 100 units from the
March 13 purchase), and (d) weighted average.
4. Compute the gross profit earned by the company for each of the four costing methods in part 3.
Analysis Component
5. If the company’s manager earns a bonus based on a percent of gross profit, which method of inventory
costing will the manag