Marak Corp. sold specialized office chairs. They purchase the chairs from the manufacturer as follows.

Beginning inventory. 1,000 units @ $60 each. ($60,000)

Purchases

5,000 units @ $100 each. ($500,000)

8,000 units @ $120 each. ($960,000)

9,000 units @ $150 each. (1,350,000)

This year the company sold 15,000 units. Sales price per unit is $240.

 Units remaining in ending inventory

1000 + 5000 + 8000 + 9000 = 23,000

23,000 -15,000 = 8,000 Units

For ending inventory, list each layer quantity and cost per unit. 

                                          Sales          Gross Profit           Ending inventory

LIFO                                  3.6 mil          1.53 mil                     1.2 mil

FIFO                                   3.6 mil          1.93 mil                     800,000

Weighted average            3.6 mil           1.73 mil                   1 mil

Provide four items Marak Corporation would consider when choosing its inventory method. (brevity is appreciated)

The next year the company experienced a supply chain problem and as such the company was unable to purchase additional inventory. At year end the ending inventory of chairs was only 1,000 units. 

Explain the effect of this on cost of goods sold priced using LIFO as opposed to FIFO? (you don’t need to do calculations)

Answer rating: 100% (QA)

Solution Four items Marak Corporation would consider when choosing its inventory method are 1 Tax im... View the full answer