Duracraft Corporation is nearing the end of its first year of operations. Duracraft made inventory purchases of $926,000 during the year, as follows:

Sales for the year are 6,000 units for $1,800,000 of revenue. Expenses other than cost of goods sold and income taxes total $425,000. The president of the company is undecided about whether to adopt the FIFO method or the weighted-average-cost method for inventories. The company uses the periodic inventory system. The income tax rate is 30%.
Requirements
1. To aid company decision making, prepare income statements under FIFO and under weighted-average cost.
2. Compare the net income under FIFO with net income under weighted-average cost. Which method produces the higher net income? What causes this difference? Be specific.

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January July November Totals 1,500 units$120.00180,000 3,000 2,000 6,500 142.00 160.00 426,000 320,000 $926,000