Mark Price Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

Inventory, May 1 $160,000

Purchases (gross) $640,000

Freight in $30,000

Sales revenue 1,000,000

Sales returns $70,000

Purchase discounts 12,000

a) compute the estimated inventory at May 31, assuming the gross profit is 30% of sales.

b) copmute the estimated inventory at May 31, assuming that th egross prifit is 30% of cost.