Comparison of Inventory Costing MethodsPeriodic System

Bitten Companys inventory records show 593 units on hand on October 1 with a unit cost of $5 each.

The following transactions occurred during the month of October:

Date Units Purchase Unit Sales

October 4 500 @ $12.00

October 8 802 @ $5.48

October 9 700 @ $12.00

October 18 695 @ $5.77

October 20 802 @ $13.00

October 29 800 @ $5.88

All expenses other than cost of goods sold amount to $2,955 for the month. The company uses an estimated tax rate of 30% to accrue monthly income taxes.

Required: 1. Prepare a chart comparing the cost of goods sold and ending inventory using the periodic system and the following costing methods. In your calculations round weighted average unit cost to three decimal places and round all other calculations and your final answers to the nearest dollar.

2. What does the Total column represent?

3. Prepare income statements for each of the three methods. When required, round your answers to the nearest dollar.

4. Will the company pay more or less tax if it uses FIFO rather than LIFO? How much more or less?