Topanga Group began operations early in 2021. Inventory purchase information for the quarter ended March 31, 2021, for Topangas only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system to report inventory and cost of goods sold.

Date of Purchase	Units		Unit Cost			Total Cost
Jan. 7	2,000		$	2.00			$	4,000
Feb. 16	10,000			3.00				30,000
March 22	14,000			4.00				56,000
Totals	26,000						$	90,000

Sales for the quarter, all at $9 per unit, totaled 16,000 units leaving 10,000 units on hand at the end of the quarter. Required: 1. Calculate Topanga's cost of goods sold for the first quarter using:

1. FIFO
2. LIFO
3. Average cost

2. Calculate Topanga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost. 3. Comment on the relative effect of each of the three inventory methods on the gross profit ratio.

Req 1A Reg 1B Req 1C Reg 2 Req3 Calculate Topanga's cost of goods sold for the first quarter using FIFO. FIFO: Cost of Goods Available for Sale Cost of Goods Sold - Periodic FIFO Cost of Goods # of units Cost per # of units Cost per Cost of Available for unit sold unit Goods Sold Sale 0 $ 0.00 $ 0 Ending Inventory - Periodic FIFO # of units Cost per in ending Ending unit Inventory inventory $ 0.00 $ 0 2.00 0 $ 2.00 0 Beginning Inventory Purchases: January 7 February 16 March 22 Total $ 0 0 2,000 $ 2.00 10,000 $ 3.00 14,000 $ 4.00 26,000 4,000 30,000 56,000 90,000 3.00 4.00 3.00 4.00 0 0 $ 0 $ 0 0 $ 0 Req 1A Req 1B Req 1C Req 2 Req3 Calculate Topanga's cost of goods sold for the first quarter using LIFO. LIFO Cost of Goods Available for Sale Cost of Goods Sold - Periodic LIFO Cost per Cost of Goods # of units Cost per Cost of # of units Available for unit sold Goods Sold unit Sale $ 0 $ 0.00 $ 0 Ending Inventory - Periodic LIFO # of units Cost per Ending in ending unit inventory Inventory $ 0.00 $ 0 2.00 0 2.00 0 Beginning Inventory Purchases: January 7 February 16 March 22 Total 0 3.00 2,000 $ 2.00 10,000 $ 3.00 14,000 $ 4.00 26,000 0 4,000 30,000 56,000 90,000 $ $ $ $ $ 3.00 4.00 0 4.00 0 $ $ 0 $ 0 0 $ $ 0 Req 1A Req 1B Req 1C Req 2 Req3 Calculate Topanga's cost of goods sold for the first quarter using average cost. (Round average cost per unit to 4 decimal places.) Average Cost Cost of Goods Available for Sale Cost of Goods Sold - Average Cost Cost of Goods Unit Average # of units Available for Cost of # of units Cost per Cost Sale sold Goods Sold Ending Inventory - Average Cost # of units Average in ending Cost per Ending inventory unit Inventory Unit Beginning Inventory Purchases: January 7 February 16 March 22 Total 2,000 $ 2.00 $ 10,000 $ 3.00 14,000 $ 4.00 26,000 $ 4,000 30,000 56,000 90,000 $ 0 $ 0 Req 1A Req 1B Req 1C Req 2 Req3 Calculate Topanga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost. Choose Numerator: - Choose Denominator: 11 FIFO LIFO Average cost Gross Profit Ratio Gross profit ratio 0 0 0 11 Req 1A Reg 1B Req 1C Req 2 Req3 Comment on the relative effect of each of the three inventory methods on the gross profit ratio. In situations when costs are rising, LIFO results in a cost of goods sold and therefore, a gross profit ratio than FIFO.