Reference no: EM132564114

Grayson Company sells many products, below is an analysis of the inventory purchases and sales of Gizmo one of its popular items for the month of March. Grayson Company

                                                       Purchases                                 Sales

                              Units                               Unit Units                        Selling Price/Unit

3/1                Beginning inventory                 100                           $55

3/3                Sales                                      60                          $130

3/4                     Purchase                              60                         $50

3/10                     Purchase                                200                    $45

3/16                        Sales                                  90                     $130

3/19                        Purchase                             80                      $40

3/25                          Sales                                50                      $130

3/30                           Sales                                 40                        $130

Required:

Question 1: Using the LIFO Perpetual assumption, calculate the amount charged to cost of goods sold and ending inventory for March assume company.

Question 2: The management objective is to save taxes, do you think Grayson has opted the right cost flow assumption if not which cost flow assumption company should opt.

Question 3: Assume the ending inventory on March-31 is mistakenly overstated, what is the effect of this error on COGS and Gross Profit for March.