Management of Boston Company expects to sell 60,000 units of the only product that it manufactures.

The firm forecasts the sales price to be $150 per unit. There are 8,500 units remaining in finished goods inventory on May 31, 19X1, at a cost of $493,000. The company expects work in process inventory to remain unchanged and desires to have 12,500 units in finished goods inventory at the end of May 19X2.

Each unit of finished product requires three gallons of material costing $4 per gallon.

Each unit takes four hours of direct labor; the cost of direct labor is $8 per hour. Factory overhead is applied on the basis of $5 per direct labor-hour. Marketing costs at this budgeted level are $1,500,000; estimated administrative costs are $1,000,000.

Required (Chapter 15 Appendix reviews inventory costing.):

a. Prepare a budgeted cost of goods manufactured statement and statement of income using FIFO costing.

b. Assume instead that the company uses LIFO costing; determine the ending finished goods inventory.

c. Assume instead that the company uses weighted-average costing; determine the ending finished goods inventory. Round to two decimal points.

d. Which inventory method is preferred for tax purposes? Explain why.

e. Is Boston Company using a Just-in-Time management philosophy? Explain your answer.