Birkin Company uses the FIFO inventory cost flow assumption. It includes the following amounts in the company’s financial statements:

IVER COR year yal, Bi ecsse out t svcses. chess csassscceec Ay deeosea ne dBsscbe ok edseetel hase tiesdavsans ots $100,000 PUNCINAS CSE prccrpecat one epeeee ccas ath ct Pos secede toc ona eb cca sesebncccc¥vANOd aoMS abet tascucu gstssiasvtansvacstiaesh 300,000 COSE OR SOONG ON erase sec opus: MSR bassced nes sdte earners Ber atest hess he cheats 250,000 HAVENEOTY MO SCEM BER Bll eosssosesosarscenaszsasarsesocenssssszessaessssessissossterivtcsacsarecutevsedeeossicesTivstisiss 150,000 The company sells only one product, and purchases and sales are made evenly throughout the year. The replacement cost of the inventory at January | and December 31 is

$125,000 and $187,500, respectively. The cost of the company’s purchases was 25%

higher at the end of the year than at the beginning.

Required: The owner of Birkin Company asks you to analyze the preceding information and tell her the following:

(1) How much would the cost of goods sold be if it was computed on the basis of the average replacement cost for the period?

(2) What is the amount of the holding gain (inventory profit) included in the income computed on a FIFO basis?

(3) Did the number of units in inventory increase or decrease during the year?

 TYK-1