Bennett Basketball sells a variety of basketballs and
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Bennett Basketball sells a variety of basketballs and accessories. Information follows for Bennett Basketball's purcha
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Bennett Basketball sells a variety of basketballs and accessories. Information follows for Bennett Basketball's purchases and sales during February and March for Up-Snap, one of its top brands of basketballs: Bennett uses a perpetual inventory system. On February 1, Bennett had 36 units on hand at a cost of $21 each. All purchases and sales during February and March were on account. Instructions (a) Determine the cost of goods sold and ending inventory under a perpetual inventory system using (1) FIFO and (2) average. (Hint: Round the average cost per unit to three decimal places.) (b) Calculate gross profit using (1) FIFO and (2) average. (c) What impact, if any, does the choice of cost formula have on cash flows? Taking It Further What factors should Bennett's owner consider when choosing a cost formula?
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