20 Feb Inventory Costing Methods Periodic SystemFollowing
Inventory Costing Methods Periodic SystemFollowing is an inventory acquisition schedule for Fees Corp. for 2008:During the year, Fees sold 11,000 units at $30 each. All expenses except cost of goods sold andtaxes amounted to $60,000. The tax rate is 30%.Required1. Compute cost of goods sold and ending inventory under each of the following three methodsassuming a periodic inventory system: (a) weighted average, (b) FIFO, and (c) LIFO.2. Prepare income statements under each of the three methods.3. Which method do you recommend so that Fees pays the least amount of taxes during 2008?Explain your answer.4. Fees anticipates that unit costs for inventory will increase throughout 2009. Will Fees be ableto switch from the method you recommended that it use in 2008 to another method to takeadvantage of the increase in prices for tax purposes? Explain your answer.