Marigold-Mart Centre Inc. began operations on May 1 and uses a perpetual inventory system. During May, the company had the following purchases and sales for one of its products:

Determine the cost of goods sold and cost of ending inventory using (1) FIFO and (2) average cost.

Which cost formula produces the higher gross profit and net income? Which cost formula produces the higher ending inventory valuation? Which cost formula produces the higher cash flow?

Date May 1 Purchases Sales Units Unit Cost Units Unit Price 120 $101 80 $252 100 275 8 100 110 301 326