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	8,000		$	5.00			$	40,000
Feb. 16	24,000			6.00				144,000
March 22	28,000			7.00				196,000
Totals	60,000						$	380,000

Sales for the quarter, all at $9 per unit, totaled 33,000 units leaving 27,000 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.

Cost of Goods Sold - Periodic FIFO FIFO: Cost of Goods Available for Sale Cost per Cost of Goods # of units Available for unit Sale 0 # of units sold Cost per unit Cost of Goods Sold Ending Inventory - Periodic FIFO # of units Cost per Ending in ending unit Inventory inventory $ 0.00 $ 0 $ 0.00 $ 0 $ 5.00 0 $ 5.00 0 Beginning Inventory Purchases: January 7 February 16 March 22 Total 6.00 $ $ $ 0 $ 6.00 8,000 $ 5.00 24,000 $ 6.00 28,000 $ 7.00 60,000 0 40,000 144,000 196,000 380,000 7.00 0 $ 7.00 0 $ 0 $ 0 0 $ 0 LIFO Cost of Goods Available for Sale Cost per Cost of Goods # of units unit Available for Sale $ 0 Cost of Goods Sold - Periodic LIFO # of units Cost per Cost of sold unit Goods Sold Ending Inventory - Periodic LIFO # of units Cost per Ending in ending unit inventory Inventory $ 0.00 $ 0 $ 0.00 $ 0 0 5.00 0 Beginning Inventory Purchases: January 7 February 16 March 22 Total 5.00 6.00 $ $ $ $ $ 0 6.00 8,000 $ 5.00 24,000 $ 6.00 28,000 $ 7.00 60,000 0 40,000 144,000 196,000 380,000 7.00 0 $ 7.00 $ 0 $ 0 0 $ Average Cost Cost of Goods Available for Sale Cost of Goods Unit # of units Cost Available for Sale Cost of Goods Sold - Average Cost # of units Average Cost of sold Unit Ending Inventory - Average Cost # of units Average Ending in ending Cost per inventory unit Inventory Cost per Goods Sold Beginning Inventory Purchases: January 7 February 16 March 22 Total 8,000 $ 5.00 $ 24,000 $ 6.00 28,000 $ 7.00 60,000 $ 40,000 144,000 196,000 380,000 $ 0 $ Choose Numerator: - Choose Denominator: +-+- II II Gross Profit Ratio = Gross profit ratio - Il 0 FIFO LIFO Average cost II 0 . In situations when costs are rising, LIFO results in a cost of goods sold and therefore, a gross profit ratio than FIFO