Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

	Transactions	Units	Unit Cost
a.	Inventory, Beginning	3,000		$13
For the year:
b.	Purchase, April 11	10,000		11
c.	Purchase, June 1	9,000		14
d.	Sale, May 1 (sold for $60 per unit)	3,000
e.	Sale, July 3 (sold for $60 per unit)	8,000
f.	Operating expenses (excluding income tax expense), $362,000

Required: 1. Calculate the number and cost of goods available for sale.

Number of goods available for sale? _____Units

Cost of goods available for sale? ______Units

2. Calculate the number of units in the ending inventory.

Ending Inventory? ______Units

3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO and (b) weighted average cost. (Round Weighted average cost per unit to two decimal places and final answers to the nearest dollar amount.)

FIFO

Ending Inventory Cost of goods sold

Weighted Average

Ending Inventory Cost of goods sold

4. Prepare an income statement that shows amounts for the FIFO method in one column and for the weighted average method in another column. Include the following line items in the income statement: Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, and Income from Operations. (Round Weighted average cost per unit to two decimal places and final answers to the nearest dollar amount.)

FIFO Weighted Average

Sales Revenue

Cost of goods sold

Gross Profit 0 0

Operating Expenses

Income from operations 0 0

6-a. Which inventory costing method may be preferred by Orion Iron Corp. for income tax purposes?

FIFO

Weighted average