Marietta Company began operations early in 2017. The below information relates to inventory it purchased for its only product for the quarter ended March 31, 2017. The units costs provided include the cost of freight. The unit costs include the freight-in expenses. Marietta uses a periodic inventory system Date of Purchases Units Unit Cost Total Cost January 6   15,000 $6.00 $ 90,000 February 15 36,000   6.75   243,000 March 21 51,000   7.5   382,500 Totals 102,000   $ 715,500   Marietta sold 60,000 units at $14.00 per unit during the period. Ending inventory on hand amounted to 42,000 units. REQUIRED: Calculate Asman’s gross profit ratio for the first quarter using: FIFO LIFO

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.