Merchandising Company

Question 1

 

• Use the Internet to research the annual report of at least one (1) merchandising company. Determine which costing method (Last In First Out [LIFO], First In First Out [FIFO], or weighted average cost) that is used to record inventory by your selected company.
• Identify the three (3) primary advantages and three (3) primary disadvantages of using the costing method (LIFO, FIFO, and weighted average) that is used to record inventory.
• Provide support for your response.

Question 2

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification units sold consist of 660 units from beginning inventory, 230 from the February 10 purchase, 110 from the March 13 purchase, 130 from the August 21 purchase, and 380 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

Question 3

Swifty Corporation had 590 units of “Dink” in its inventory at a cost of $11 each. It purchased 890 more units of “Dink” at a cost of $17 each. Swifty then sold 1120 units at a selling price of $28 each. The LIFO liquidation overstated normal gross profit by

A. $ -0-

B. $1380.

C. $1800.

D.$3180.