Lakshmi Ltd. uses the perpetual inventory system and reports the following inventory transactions for the month of June:

Date	Explanation	Units	Unit Cost	Total Cost
June	1	Inventory	171	$6	$1,026
12	Purchase	242	6	1,452
15	Sale	(253	)
16	Purchase	461	7	3,227
23	Purchase	164	8	1,312
27	Sale	(541	)

Determine the cost of goods sold and the cost of the ending inventory using (1) FIFO and (2) average.(Round final answers to 2 decimal places, e.g. 1.25. Do not round intermediate calculations.)

	FIFO	Average
Cost of goods sold	$	$
Cost of ending inventory	$	$

Which cost formula results in the higher cost of goods sold? Why? The cost formularesults in a cost of goods sold because the cost of inventory is .

Which cost formula results in the higher profit? Why? The costformula results in a profit because it produces the cost of goods sold when prices are .

Which cost formula results in the higher ending inventory? Why? The costformula results in a ending inventory because the cost of inventory is .

Which cost formula results in the higher pre-tax cash flow? Why? costformulas result in the same pre-tax cash flow. The cost formulas the pre-tax cash flows of a company.

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