Over sufficiently long time spans, income equals cash inflows minus cash out- flows; cost flow assumptions. Benton Company has been in business for four years. Its purchases and sales during that four-year period appear below.

Ignore income taxes.

a. Compute income for each of the four years assuming FIFO cost flow.

b. Compute income for each of the four years assuming LIFO cost flow.

c. Compare total income over the four-year period. Does the cost flow assumption matter?

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Purchases Sales Units Unit Cost Units Unit Price Year 1 .. 15,000 $20 7,000 $25 Year 2 .. 12,000 22 10,000 28 Year 3 .. 10,000 24 12,000 30 Year 4 ... 7,000 26 15,000 33 Totals. 44,000 44,000