Solution-Determine the gross profit for each year

Determine the gross profit for each year

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Problem - Alternative Inventory Methods - Habicht Company was formed in 2018 to produce a single product. The production and sales for the next 4 years were as follows:

	Production		Sales
	Units	Total Costs	Units	Sales Revenue	Units in Ending Inventory
2018	100,000	$200,000	80,000	$400,000	20,000
2019	120,000	234,000	110,000	550,000	30,000
2020	130,000	247,000	150,000	750,000	10,000
2021	130,000	240,500	120,000	600,000	20,000

Required -

1. Determine the gross profit for each year under each of the following periodic inventory methods:

a. FIFO

b. LIFO

c. Average cost (Round unit costs to 3 decimal places.)

2. Explain whether the company's return on assets (net income divided by average total assets) would be higher under FIFO or LIFO.

Reference no: EM132882804

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Determine the gross profit for each year

Reference no: EM132882804

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