1. Gamma Retail

Scenario: FIFO Inventory Valuation

Data: Gamma Retail uses the FIFO method for inventory valuation. At the beginning of the year, inventory consisted of 1,000 units at $10 per unit. During the year, the following transactions occurred:

• Purchased 2,000 units at $12 per unit
• Purchased 1,500 units at $14 per unit
• Sold 3,500 units

Requirements:

1. Calculate Gamma Retail's cost of goods sold (COGS) using the FIFO method.
2. Determine the value of ending inventory using the FIFO method.
3. Discuss the advantages and disadvantages of FIFO for inventory valuation.
4. Analyze how FIFO affects Gamma Retail's profitability compared to LIFO.
5. Evaluate the impact of inventory turnover on Gamma Retail's cash flow.
6. Recommend inventory management strategies based on FIFO principles.