Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $24. A summary of purchases during the current period follows: Units Unit Cost Cost Beginning Inventory 1,000 Purchases: $24 $24,000 # 1 1,800 26 46,800 #2 800 30 24,000 #3 1,200 33 39,600 During the current period, Chen sold 2,800 units. a. Assume that Chen uses the first-in, first-out method. Compute its cost of goods sold for the current period and the ending inventory balance. Cost of Goods Sold $ Ending Inventory $ 63,600 70,800 b. Assume that Chen uses the last-in, first-out method. Compute its cost of goods sold for the current period and the ending inventory balance. Cost of Goods Sold $ 84,400 Ending Inventory $ 50,000 c. Assume that Chen uses the average cost method. Compute its cost of goods sold for the current period and the ending inventory balance. Cost of Goods Sold $ Ending Inventory $ 79,100 x 56,500 x d. Which of these three inventory costing methods would you choose to (assume a period of rising prices): 1. Reflect what is probably the physical flow of goods? FIFO 2. Minimize income taxes for the period? LIFO 3. Report the largest amount of income for the period? FIFO