The following information relates to Hogs Back Falls Ltd.’s inventory transactions during the month of February.

All of the units sold were priced at $85.00 per unit.

Required

a. Hogs Back Falls Ltd. uses the perpetual inventory system. Calculate Hogs Back’s cost of goods sold, gross margin, and ending inventory for the month of February 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?

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Amount Units 7,500 6,500 4,000 500 4,000 4,000 2,900 Cost/Unit Beginning inventory Feb. 1 $25.00 $187,500 10 Sale 14 Purchase $26.00 $104,000 18 $29.00 Purchase $ 14,500 25 Sale 26 $140,000 Purchase $35.00 28 Sale