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藝營 Help 四令78% B Meeting 5.pdf (page 2 of 7) Transaction Units Unit cost (in €) Beginning inventory 30 10 8. February 5: Purchases 1. 11 July 12: Purchases 10 September 20: Purchases 12 01 Requirements Tom wants to know the gross margin for Bookmarker for this title and also the total value of the ending inventory (Hint gross margin is caleulated as: sales revenues cost of goods sold). He can easily calculate total sales revenue for this title, because he knows that 45 books were sold during 2018 at a price of €20 per copy, but he is not sure what number he has to use for the cost of goods sold. He knows this number depends on the assumed cost flow method. Looking in his accounting textbook, he quickly realizes that a cost-benefit trade-off will show that the specific identification method is not useful for Bookmarker. However, he sees that there are three other methods that he can use, namely FIFO, Average-cost, and LIFO. He makes a table to compare the results for all three methods. More specifically, he wants to compare sales revenue, cost of goods sold, gross margin, and ending inventory under each of the se cost flow methods. Which of the methods should he choose to L. Align the assumed cost flow method with the physical flow of goods? 2. Obtain the highest gross margin, given that the unit costs of the inventory are rising over time? 3. Obtain the highest inventory value on the balance sheet, given that the unit costs of the inventory are rising over time? MacBook Air

藝營 Help 四令78% B Meeting 5.pdf (page 2 of 7) Transaction Units Unit cost (in €) Beginning inventory 30 10 8. February 5: Purchases 1. 11 July 12: Purchases 10 September 20: Purchases 12 01 Requirements Tom wants to know the gross margin for Bookmarker for this title and also the total value of the ending inventory (Hint gross margin is caleulated as: sales revenues cost of goods sold). He can easily calculate total sales revenue for this title, because he knows that 45 books were sold during 2018 at a price of €20 per copy, but he is not sure what number he has to use for the cost of goods sold. He knows this number depends on the assumed cost flow method. Looking in his accounting textbook, he quickly realizes that a cost-benefit trade-off will show that the specific identification method is not useful for Bookmarker. However, he sees that there are three other methods that he can use, namely FIFO, Average-cost, and LIFO. He makes a table to compare the results for all three methods. More specifically, he wants to compare sales revenue, cost of goods sold, gross margin, and ending inventory under each of the se cost flow methods. Which of the methods should he choose to L. Align the assumed cost flow method with the physical flow of goods? 2. Obtain the highest gross margin, given that the unit costs of the inventory are rising over time? 3. Obtain the highest inventory value on the balance sheet, given that the unit costs of the inventory are rising over time? MacBook Air

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 62E
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藝營 Help 四令78% B Meeting 5.pdf (page 2 of 7) Transaction Units Unit cost (in €) Beginning inventory 30 10 8. February 5: Purchases 1. 11 July 12: Purchases 10 September 20: Purchases 12 01 Requirements Tom wants to know the gross margin for Bookmarker for this title and also the total value of the ending inventory (Hint gross margin is caleulated as: sales revenues cost of goods sold). He can easily calculate total sales revenue for this title, because he knows that 45 books were sold during 2018 at a price of €20 per copy, but he is not sure what number he has to use for the cost of goods sold. He knows this number depends on the assumed cost flow method. Looking in his accounting textbook, he quickly realizes that a cost-benefit trade-off will show that the specific identification method is not useful for Bookmarker. However, he sees that there are three other methods that he can use, namely FIFO, Average-cost, and LIFO. He makes a table to compare the results for all three methods. More specifically, he wants to compare sales revenue, cost of goods sold, gross margin, and ending inventory under each of the se cost flow methods. Which of the methods should he choose to L. Align the assumed cost flow method with the physical flow of goods? 2. Obtain the highest gross margin, given that the unit costs of the inventory are rising over time? 3. Obtain the highest inventory value on the balance sheet, given that the unit costs of the inventory are rising over time? MacBook Air
Transcribed Image Text:藝營 Help 四令78% B Meeting 5.pdf (page 2 of 7) Transaction Units Unit cost (in €) Beginning inventory 30 10 8. February 5: Purchases 1. 11 July 12: Purchases 10 September 20: Purchases 12 01 Requirements Tom wants to know the gross margin for Bookmarker for this title and also the total value of the ending inventory (Hint gross margin is caleulated as: sales revenues cost of goods sold). He can easily calculate total sales revenue for this title, because he knows that 45 books were sold during 2018 at a price of €20 per copy, but he is not sure what number he has to use for the cost of goods sold. He knows this number depends on the assumed cost flow method. Looking in his accounting textbook, he quickly realizes that a cost-benefit trade-off will show that the specific identification method is not useful for Bookmarker. However, he sees that there are three other methods that he can use, namely FIFO, Average-cost, and LIFO. He makes a table to compare the results for all three methods. More specifically, he wants to compare sales revenue, cost of goods sold, gross margin, and ending inventory under each of the se cost flow methods. Which of the methods should he choose to L. Align the assumed cost flow method with the physical flow of goods? 2. Obtain the highest gross margin, given that the unit costs of the inventory are rising over time? 3. Obtain the highest inventory value on the balance sheet, given that the unit costs of the inventory are rising over time? MacBook Air
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