Basis Furniture Ltd. uses a perpetual inventory system and has a beginning inventory, as at June 1, of 500 bookcases at a cost of $125 each. During June, the company had the following purchases and sales of bookcases:

		Purchases		Sales
Date		Units	Unit Cost	Units	Unit Price
June	6	1,200	$127
	10			1,000	$200
	14	1,800	128
	16			1,600	205
	26	1,000	129

Instructions

1. Determine the cost of goods sold and the cost of the ending inventory using the average cost formula. (Use unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.)
2. Calculate Basis Furnitures gross profit and gross profit margin for the month of June.
3. Is the gross profit determined in part (b) higher or lower than it would be if Basis Furniture had used FIFO? Explain.