How swag diamonds could maximize its gross profits

Assignment Help Accounting Basics

Reference no: EM131965683

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.

Reference no: EM131965683

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