How the financial results change using alternative inventory

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Reference no: EM13259110

Bay Corp., sold 6,500 units of its product at $50 per unit inthe year 2009 and incurred operating expenses of $5 per unit in selling the units. It began the year with 900 units in inventory and made successive purchases of its products as follows:

Jan 1 Beginninginventory......................... 900 units @ $21 perunit
Feb 20 Purchaes........................................ 1,950units @ $22 per unit
May 16 Purchase....................................... 1,050units @ $25 per unit
Oct 13 Purchase........................................ 700units @ $26 per unit
Dec 11 Purchase....................................... 2,750 units @ $27 per unit
Total................................................ 7,350units

a) Prepare comparative incomestatements for the three inventory costing methods of FIFO,LIFO, and weightedaverage (round per unit cost to three decimals.) Include a detailedcost of goods sold section aspart of each statement. The company uses a periodic inventorysystem, and its tax rate is 40%.

b) How would the financial results from using the three alternative inventory costing methods change if Bayhad been experincing declining cost of purchases ofinventory?

Reference no: EM13259110

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