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The company uses a periodic inventory system and the LIFO cost method for its grill inventory.
1,100
The replacement cost of the grills throughout 2019 was $1,200. Cast Iron sold 41,000 grills during 2019. The company's selling price is set at 200% of the current replacement cost.
Required:
1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 under two different assumptions. First, that Cast Iron purchased 42,000 units and, second, that Cast Iron purchased 22,000 units during the year.
4. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 assuming that Cast Iron purchased 42,000 units (as per the first assumption) and 22,000 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method.
