You have the following information for Windsor, Inc.. Windsor, Inc. uses the periodic method of accounting for its inventory transactions. Windsor, Inc. only carries one brand and size of diamonds-all
are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost.
March 1 Beginning inventory 155 diamonds at a cost of $328 per diamond.
March 3
Purchased 193 diamonds at a cost of $344 each.
March 5 Sold 175 diamonds for $607 each.
March 25 Sold 406 diamonds for $642 each.
March 10 Purchased 361 diamonds at a cost of $353 each.
Assume that Windsor, Inc. uses the specific identification cost flow method.
(1) Demonstrate how Windsor, Inc. could maximize its gross profit for the month by specifically selecting which diamonds to sell on March 5 and March 25.
To maximize gross profit, Windsor, Inc. should sell the diamonds with the
cost.
(2) Demonstrate how Windsor, Inc. could minimize its gross profit for the month by selecting which diamonds to sell on March 5 and March 25.
To minimize gross profit, Windsor, Inc. should sell the diamonds with the
cost.
Assume that Windsor, Inc. uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?
Cost of goods sold
Gross profit
Assume that Windsor, Inc. uses the LIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?
Cost of goods sold
Gross profit
