MusicBiz.net Ltd. specializes in sound equipment. Because each inventory item is expensive, MusicBiz uses a perpetual inventory system. Company records indicate the following data for a line of speakers:

Requirements

1. Determine the amounts that MusicBiz should report for cost of goods sold and ending inventory in the following two ways:

a. FIFO

b. Weighted-average cost

2. MusicBiz uses the FIFO method. Prepare MusicBiz's income statement for the month ended June 30, 2017, reporting gross profit. Operating expenses totaled $319, and the income tax rate was 25%.

3. Music Biz is thinking of changing inventory costing methods from FIFO to weighted-average cost. Are they allowed to make this change? Briefly explain.