Army-Navy Surplus Ltd. began March 2017 with 70 tents that cost $20 each. During the month, Army-Navy Surplus made the following purchases at cost:

Army-Navy Surplus sold 320 tents (150 tents on March 22 and 170 tents on March 30), and at March 31 the ending inventory consists of 50 tents. The sale price of each tent was $45.

Requirements

1. Determine the cost of goods sold and ending inventory amounts for March under

(a) Weighted-average cost and

(b) FIFO cost assuming the perpetual system is used. Round weighted-average cost per unit to four decimal places, and round all other amounts to the nearest dollar.

2. Explain why cost of goods sold is highest under weighted-average cost. Be specific.

3. Prepare Army-Navy Surplus's income statement for March 2017. Report gross profit. Operating expenses totaled $4,000. Army-Navy Surplus uses weighted-average costing for inventory. The income tax rate is 21%.