Questions -
Q1. Stubbs Company uses the perpetual inventory method. On January 1, 2016, Stubbs purchased 1,050 units of inventory that cost $8.50 each. On January 10, 2016, the company purchased an additional 600 units of inventory that cost $5.50 each. If Stubbs uses a weighted average cost flow method and sells 2,000 units of inventory for $17 each, the amount of gross margin reported on the income statement will be (Round your intermediate calculations to two decimal places.):
$19,850.
$14,820.
$23,000.
$19,180.
Q2. Blake Company purchased two identical inventory items. The item purchased first cost $25.00, and the item purchased second cost $26.00. Blake sold one of the items for $46.00. Which of the following statements is true?
Gross margin will be higher if Blake uses LIFO than it would be if FIFO were used.
The dollar amount assigned to ending inventory will be the same no matter which cost flow method is used.
Cost of goods sold will be higher if Blake uses FIFO than if weighted average were used.
Ending inventory will be lower if Blake uses weighted average than if FIFO were used.
Q3. Anton Co. uses the perpetual inventory method. Anton purchased 720 units of inventory that cost $6 each. At a later date the company purchased an additional 840 units of inventory that cost $8 each. If Anton uses the FIFO cost flow method and sells 1,100 units of inventory, the amount of cost of goods sold will be:
$7,360.
$8,760.
$8,800.
$6,600.