If your instructor has assigned the Appendix to this chapter, redo Problem AP7-8B assuming that the company uses a periodic inventory system. Round weighted-average per unit cost to two decimal places.

Data from AP7-8B

The following information relates to Toolworks Ltd.’s inventory transactions during the month of October.

All of the units sold on October 5 were priced at $25 per unit. All of the units sold on October 15 and 31 were priced at $35 per unit.

Required

a. Toolworks Ltd. uses the perpetual inventory system. Calculate Toolworks’ cost of goods sold, gross margin, and ending inventory for the month of October using:

i. FIFO

ii. weighted-average. Round per unit cost to two decimal places.

b. Which of the cost formulas would produce the higher gross margin?

Amount Units 2,500 350 1,200 Cost/Unit Beginning inventory $33,750 Oct. 1 $13.50 5 Sale Purchase Purchase 11 $14.00 $13.50 $16,800 13 500 $ 6,750 15 29 1,500 2,500 3,500 Sale Purchase $12.00 $30,000 31 Sale