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In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicoles Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system.

On December 31, NGS purchased 10 units at a total cost of $6.70 per unit. Nicole purchased 30 more units at $8.30 in February. In March, Nicole purchased 20 units at $10.30 per unit. In May, 50 units were purchased at $10.10 per unit. In June, NGS sold 50 units at a selling price of $12.30 per unit and 40 units at $10.30 per unit.

a.) Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Round "Cost per Unit" to 2 decimal places.)

FIFO (Perpetual)
	Units	Cost per Unit	Total
Beginning Inventory			$0
Purchases
February
March
May
Net Purchases	0		0
Goods Available for Sale
Cost of Goods Sold
Units from Beginning Inventory
Units from February Purchase
Units from March Purchase
Units from May Purchase
Total Cost of Goods Sold	0		0
Ending Inventory

b.) Calculate the inventory turnover ratio, using the inventory purchased on December 31 as the beginning inventory. (Round your answers to 2 decimal places.)

c.) Would a different inventory cost flow assumption allow Nicoles Getaway Spa to better minimize its income tax?

Multiple Choice

• The LIFO method would allow Nicoles Getaway Spa to better minimize income tax. Product costs have been mostly increasing, so LIFO will produce the highest Cost of Goods Sold, which results in the lowest Income before Income Tax Expense.

• The FIFO method would allow Nicoles Getaway Spa to better minimize income tax. Product costs have been mostly increasing, so FIFO will produce the highest Cost of Goods Sold, which results in the lowest Income before Income Tax Expense.