COGS,Gross Margin,and Ending Inventory calculation on LIFO,FIFO,& Weighted Average basis

May 5th, 2015
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How to calculate Cost of goods sold, Gross margin, and Ending inventory using Last-in-First-out, First-in-First-out, and Weighted average valuation methods with examples, data and calculation for the easy understanding of students.

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Question3:Understand how to compute COGS, gross margin and ending inventory using LIFO, FIFO, and weighted average valuation methods?Answer:Sales: Sales are the full income for the year for selling goods.Cost of goods sold: This refers to the cost of all the goods that we sold this year. It is also known ascost of sales. Cost of goods sold is an expense charged against sales to work out agross profit(see definitionbelow). So, for example, we may have sold 100 units this year at $4 each, and these 100 units that we sold cost us $3 each originally. So oursaleswould be $400 and ourcost of the goods we sold(cost of sales) would amount to $300. This would result in agross profitof $100 (sales minus cost of sales).Cost of goods soldis not the same aspurchases.Gross profit: An initial profit on the product we are selling, before deducting general business expe

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