Tiny Packs produces leather backpack purses that it markets to working professionals looking for an alternative to a briefcase or standard purse. Tiny Packs' products originate in the Cutting department, and they are then put together in the Assembly department. At the conclusion of the assembly process, each backpack is subject to a short inspection before being packaged for sale. The following unit information was compiled to reflect activity in the Assembly department for the most recent month of August:
The costs associated with the aforementioned units for the month of August is as follows:
Tiny Packs has not yet made a final decision regarding the use of First-In, First-Out (FIFO) or Weighted-Average. They sell each backpack for $98.50 per backpack. (Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for each category of cost using the FIFO method?
b. What is the equivalent cost per unit for each category of cost using the Weighted-Average method?
c. What is the gross margin percentage under both FIFO and Weighted-Average? Which method should Tiny consider implementing?

Question

Tiny Packs produces leather backpack purses that it markets to working professionals looking for an alternative to a briefcase or standard purse. Tiny Packs' products originate in the Cutting department, and they are then put together in the Assembly department. At the conclusion of the assembly process, each backpack is subject to a short inspection before being packaged for sale. The following unit information was compiled to reflect activity in the Assembly department for the most recent month of August:
  The costs associated with the aforementioned units for the month of August is as follows:
  Tiny Packs has not yet made a final decision regarding the use of First-In, First-Out (FIFO) or Weighted-Average. They sell each backpack for $98.50 per backpack. (Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for each category of cost using the FIFO method?
b. What is the equivalent cost per unit for each category of cost using the Weighted-Average method?
c. What is the gross margin percentage under both FIFO and Weighted-Average? Which method should Tiny consider implementing?

Quizplus · Accepted Answer

The Answer of Tiny Packs produces leather backpack purses that it markets to working professionals looking for an alternative to a briefcase or standard purse. Tiny Packs' products originate in the Cutting department, and they are then put together in the Assembly department. At the conclusion of the assembly process, each backpack is subject to a short inspection before being packaged for sale. The following unit information was compiled to reflect activity in the Assembly department for the most recent month of August:
  The costs associated with the aforementioned units for the month of August is as follows:
  Tiny Packs has not yet made a final decision regarding the use of First-In, First-Out (FIFO) or Weighted-Average. They sell each backpack for $98.50 per backpack. (Round units to whole number and cost to two decimal places.)
a. What is the equivalent cost per unit for each category of cost using the FIFO method?
b. What is the equivalent cost per unit for each category of cost using the Weighted-Average method?
c. What is the gross margin percentage under both FIFO and Weighted-Average? Which method should Tiny consider implementing?

Tiny Packs Produces Leather Backpack Purses That It Markets to Working