Problem $5-3$A $($Algo$)$ Perpetual: Alternative cost flows LO P$1$

Montoure Company uses a perpetual inventory system. It entered into the following calendar$-$year purchases and sales transactions.

Date Activities Units Acquired at Cost Units Sold at Retail

January $1$ Beginning inventory $540$ units @ $$40$ per unit

February $10$ Purchase $320$ units @ $$36$ per unit

March $13$ Purchase $100$ units @ $$24$ per unit

March $15$ Sales $650$ units @ $$85$ per unit

August $21$ Purchase $120$ units @ $$45$ per unit

September $5$ Purchase $520$ units @ $$41$ per unit

September $10$ Sales $640$ units @ $$85$ per unit

Totals $1,600$ units $1,290$ units

Required:

Compute cost of goods available for sale and the number of units available for sale.

Compute the number of units in ending inventory.

Compute the cost assigned to ending inventory using $($a$)$ FIFO, $($b$)$ LIFO, $($c$)$ weighted average, and $($d$)$ specific identification. $($For specific identification, units sold consist of $540$ units from beginning inventory, $220$ from the February $10$ purchase, $100$ from the March $13$ purchase, $70$ from the August $21$ purchase, and $360$ from the September $5$ purchase.$)$

Compute gross profit earned by the company for each of the four costing methods.

Note: Round your average cost per unit to $2$ decimal places.

The company$$s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

multiple choice

Weighted Average

Specific Identification

LIFO

FIFO