Problem
You are provided with the following information for swag diamonds ltd. swag only carries one brand and size of diamond- all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost.
Mar 1: beginning inventory is 140 diamonds at a cost of $ 500 per diamond
3: purchased 200 diamonds at a cost of $ 540 each
5: sold 170 diamond for $ 800 each
10: purchased 340 diamond at a cost of $ 570 each
25: sold 500 diamonds for $ 850 each
instructions
a) assuming that swag diamonds uses the specific identification method, do the following:
1) show how swag diamonds could maximize its gross profits for the month by selecting which diamonds to sell on march 5 and march 25
2) show how swag diamonds could minimize its gross profit for the month by selecting which diamonds to sell on march 5 and march 25
B) who are the stakeholders in this situation? is there anything unethical in choosing which diamonds to sell in a month?
C) Assuming that swag diamonds uses a perpetual inventory system and average cost method, how much gross profit would swag diamonds report ? ( ROUND THE AVERAGE UNIT COST TO THE NEAREST CENT- TWO DECIMAL POINT)
d) which method of cost determination - specific identification or average cost should swag diamonds select? explain.