Cast Iron Grills, Inc., manufactures premium gas barbecuegrills. The company reports inventory and cost...

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Accounting

Cast Iron Grills, Inc., manufactures premium gas barbecuegrills. The company reports inventory and cost of goods sold basedon calculations from a LIFO periodic inventory system. Cast Iron’sDecember 31, 2021, fiscal year-end inventory consisted of thefollowing (listed in chronological order of acquisition):
Units Unit Cost
8,800 $ 600
5,900 700
9,800 800

The replacement cost of the grills throughout 2022 was $900. CastIron sold 46,000 grills during 2022. The company's selling price isset at 200% of the current replacement cost.

Required:
1. & 2. Compute the grossprofit (sales minus cost of goods sold) and the gross profit ratiofor 2022 under two different assumptions. First, that Cast Ironpurchased 47,000 units and, second, that Cast Iron purchased 24,500units during the year.
4. Compute the gross profit (sales minus cost ofgoods sold) and the gross profit ratio for 2022 assuming that CastIron purchased 47,000 units (as per the first assumption) and24,500 units (as per the second assumption) during the year anduses the FIFO inventory cost method rather than the LIFOmethod.

Answer & Explanation Solved by verified expert

3.7 Ratings (598 Votes)

Solution 12 Under LIFO method it is assumed that inventory purchased last is sold first Sales Units 46000 Selling Price 200Replacement Cost 200900 1800 Cast Iron purchased 47000 units Sales See Answer

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In: AccountingCast Iron Grills, Inc., manufactures premium gas barbecuegrills. The company reports inventory and cost of...Cast Iron Grills, Inc., manufactures premium gas barbecuegrills. The company reports inventory and cost of goods sold basedon calculations from a LIFO periodic inventory system. Cast Iron’sDecember 31, 2021, fiscal year-end inventory consisted of thefollowing (listed in chronological order of acquisition):UnitsUnit Cost8,800$6005,9007009,800800The replacement cost of the grills throughout 2022 was $900. CastIron sold 46,000 grills during 2022. The company's selling price isset at 200% of the current replacement cost.Required:1. & 2. Compute the grossprofit (sales minus cost of goods sold) and the gross profit ratiofor 2022 under two different assumptions. First, that Cast Ironpurchased 47,000 units and, second, that Cast Iron purchased 24,500units during the year.4. Compute the gross profit (sales minus cost ofgoods sold) and the gross profit ratio for 2022 assuming that CastIron purchased 47,000 units (as per the first assumption) and24,500 units (as per the second assumption) during the year anduses the FIFO inventory cost method rather than the LIFOmethod.