Wolick Company had a beginning inventory on January 1 of 300 units of Product SXL at a cost of $21 per unit. During the year, the following purchases were made:

_____________________Units                     Unit Cost

Mar. 15……………………800…………………..$20

July 20…………………….600……………………19

Sept. 4…………………….250……………………18

Dec. 2……………………..100……………………17

At the end of the year, there were 350 units on hand. Wolick Company uses a periodic inventory system.

Instructions

(a) Determine the cost of goods available for sale.

(b) During the year, Wolick Company sold Product SXL for $33 per unit. Calculate the number of units sold during the year and total sales revenue.

(c) Determine the cost of the ending inventory and the cost of goods sold using (1) FIFO and (2) average.

(d) Calculate gross profit using (1) FIFO and (2) average.

Taking It Further

The owner of Wolick Company would like to minimize his income taxes. Last year, prices were rising and Wolick Company used the average cost formula. This year, the owner would like to use FIFO. Should the company change? Explain.