In the First Month of Operations Mordica Company Made Three

question 53

Essay

In the first month of operations Mordica Company made three purchases of merchandise in the following sequence: (1) 200 units at $6 (2) 300 units at $7 and (3) 400 units at $9. Assuming there are 300 units on hand compute the cost of the ending inventory under (1) the FIFO method and (2) the LIFO method. Mordica uses a periodic inventory system.

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Definitions:

Segment Margin

The amount of profit or loss generated by a specific segment of a business, after accounting for the direct costs and traceable fixed costs.

Avoidable Cost

Expenses that can be eliminated if a particular action is not taken.

Special Order

An order for goods or services that is outside of a company's normal operations, often requiring unique pricing or production considerations.

Minimum Selling Price

The lowest price at which a product or service can be sold while still covering its production or procurement costs.