March 1 - Purchase - 100 units/$50 = $5000 March 5 - Purchase - 400 units/$55 = $22000 March 9 - Sales - 420 units/$85 = $35700 March 18 - Purchase - 120 units/$60 = $7200 March 25 - Purchase - 200 units/$62 = $12400 March 29 - Sales - 160 units/$95 = $15200

2. The CEOs bonus is calculated using net income before income taxes. If the CEO wishes to maximize her bonus, which of the following methods would you recommend? 3. Alternatively, the CEO desires the method that minimizes income taxes paid by the company in the current year. If income taxes are based on a percentage of net income, which method would you recommend to the CEO?

The CEO has asked you to help her decide whether to use LIFO or FIFO for inventory costing. Compute the gross profit earned by the company for both LIFO and FIFO. Periodic FIFO Ending Inventory Cost of Goods Available for Sale Cost of Goods Sold Cost of Goods ... # of units Cost of Cost per unit # of units Available for Cost per sold Sale unit Goods Sold Date # of units in ending | inventory Cost per unit Ending Inventory March 1 March 5 March 18 March 25 Total $ 0 0 Periodic LIFO Cost of Goods Sold Ending Inventory Date Cost of Goods Available for Sale Cost of Goods # of units Cost per unit Available for Sale 100 # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory March 1 March 5 March 18 March 25 Total 100 $ 0 0 0 0 0 Gross Profit FIFO LIFO