The following information pertains to Mason Company for 2018: Beginning inventory 120 units @ $40 Units purchased 330 units @ $44 Ending inventory consisted of 70 units. Mason sold 380 units at $88 each. All purchases and sales were made with cash. Operating expenses amounted to $3100.A. Compute the gross margin for Mason Company using the following cost flow assumptions:
1) FIFO.2) LIFO.3) Weighted average.
B. What is the amount of net income using FIFO, LIFO, and weighted average?
C. Compute the amount of ending inventory using (1) FIFO, (2) LIFO, and (3) weighted average.

total revenue = 380 units x $88 = $33,440

Beginning inventory     120 units @ $40 = $4,800

Units purchased            330 units @ $44 = $14,520

total                                450 units              $19,320

Ending inventory consisted of 70 units.

COGS using LIFO = $19,320 - (70 units x $40) = $16,520

COGS using FIFO = $19,320 - (70 units x $44) = $16,240

COGS using weighted average = $19,320 - [70 units x ($19,320/450)] = $16,315

A. Compute the gross margin for Mason Company using the following cost flow assumptions:

1) FIFO ⇒ $33,440 - $16,240 = $17,200

2) LIFO ⇒ $33,440 - $16,520 = $16,920

3) Weighted average ⇒ $33,440 - $16,315 = $17,125

B. What is the amount of net income using FIFO,LIFO, and weighted average?

1) FIFO ⇒ $33,440 - $16,240 = $17,200 - $3,100 = $14,100

2) LIFO ⇒ $33,440 - $16,520 = $16,920 - $3,100 = $13,820

3) Weighted average ⇒ $33,440 - $16,315 = $17,125 - $3,100 = 14,025

C. Compute the amount of ending inventory using (1) FIFO, (2) LIFO, and (3) weighted average.

1) FIFO ⇒ 70 units x $44 = $3,080

2) LIFO ⇒ 70 units x $40 = $2,800

3) Weighted average ⇒ 70 units x ($19,320/450) = $3,005

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