Continuation of preceding problem introducing current cost concepts. (Do not attempt this problem until you have worked Problem 40.) Assume the same data for Burton Corporation as given in the previous problem. In addition, assume the following:

a. Prepare an analysis for Year 1 that identifies operating margins, realized holding gains and losses, and unrealized holding gains and losses for the FIFO, LIFO, and weighted-average cost flow assumptions.

b. Repeat part a for Year 2 .

c. Demonstrate that over the two-year period, income plus holding gains before taxes of Burton Corporation are independent of the cost flow assumption.

Transcribed Image Text:

Selling Price per Unit Year 1 Year 2 Average Current Replacement Cost Year 1 ... Year 2 December 31, Year 1 ..... Current Replacement Cost December 31, Year 2. $25 22 $14 12 $16 10