2. (20 min.)

1. FIFO: Ending inventory $2,750

300 units @ $8 = $2,400

50 units @ $7 = 350

—————————————— ——————

350 units $2,750

2. Average Cost: Ending inventory $2,100

$6,000 ÷ 1,000 = $6.00 per unit x 350 units = $2,100

3. LIFO: Ending Inventory $1,650

100 units @ $4 = $ 400

250 units @ $5 = 1,250

—————————————— ——————

350 units $1,650

4. FIFO: Cost of goods sold $3,250

100 units @ $4 = $ 400

500 units @ $5 = 2,500

50 units @ $7 = 350

—————————————— ——————

650 units $3,250

LIFO: Cost of goods sold $4,350

300 units @ $8 = $2,400

100 units @ $7 = 700

250 units @ $5 = 1,250

—————————————— ——————

650 units $4,350

Income would have been $1,100 ($4,350 vs. $3,250) greater if the

company used FIFO instead of LIFO.