# Jelly Bros. Tools, Inc. had the following layers in its LIFO tablesaw inventory at january 1, 2018. The company sets its selling price at 200% of relacement cost at the time of sale. Replacement cost as of January 1, 2018 was \$850 per unit and remained unchanged throughout 2018. During 2018, the company puchased 650 units and sold 1,150 units.Yeaar LIFO layer added                   Units                        Unit Cost2015                                                200                          \$7402016                                                190                          \$7802017                                                170                          \$820Required:1. Calculate the difference between Jelly Bros. Tools, Inc.'s current cost gross margin (on a replacement cost basis) and the LIFO gross margin as reported by the company in 2018. 2. What does the difference represent?

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Jelly Bros. Tools, Inc. had the following layers in its LIFO tablesaw inventory at january 1, 2018. The company sets its selling price at 200% of relacement cost at the time of sale. Replacement cost as of January 1, 2018 was \$850 per unit and remained unchanged throughout 2018. During 2018, the company puchased 650 units and sold 1,150 units.

Yeaar LIFO layer added                   Units                        Unit Cost

2015                                                200                          \$740

2016                                                190                          \$780

2017                                                170                          \$820

Required:

1. Calculate the difference between Jelly Bros. Tools, Inc.'s current cost gross margin (on a replacement cost basis) and the LIFO gross margin as reported by the company in 2018.

2. What does the difference represent?

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Step 1

Calculate the current operating margin.

Step 2

1. Calculate the difference between current cost gross margin (on a replacement cost bas...

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