MusicBiz.net Ltd. Specializes in sound equipment. Because each inventory item is expensive, MusicBiz uses a perpetual inventory system. Company records indicate the following data for a line of speakers:

Date Item Quantity Unit Cost Sale Price

June 01 Balance 6 $95

June 08 Sale 3 $155

June 10 Purchase 11 $100

June 30 Sale 5 $160

Requirements

1. Determine the amounts that MusicBiz should report for cost of goods sold and ending inventory in the following two ways:
   1. FIFO
   2. Weighted-average cost
2. MusicBiz uses the FIFO method. Prepare MusicBizs income statement for the month ended June 30, 2020, reporting gross profit. Operating expenses totalled $319, and the income tax rate was 25%.
3. MusicBiz is thinking of changing inventory costing methods from FIFO to weighted-average cost. Are they allowed to make this change? Briefly explain.