You are the newly hired controller for Everest, Inc., a major online retailer of consumer goods. Everest keeps a large inventory of consumer goods on hand for quick shipment to consumers. The CEO of Everest has asked you to recommend an inventory costing method for financial statement reporting purposes.

• Describe the three methods of inventory costing: FIFO, LIFO, and weighted average cost.
• Summarize one advantage and one disadvantage of each of the three methods of inventory costing: FIFO, LIFO, and weighted average cost.
• Discuss which of the three methods of inventory costingFIFO, LIFO, or average costwill, in general, yield an inventory cost most nearly approximating current replacement cost.
• If inventory is being valued at cost, and the price level is steadily rising, discuss which of the three methods of costingFIFO, LIFO, or average costwill yield
  1. the highest inventory cost,
  2. the lowest inventory cost,
  3. the highest gross profit, and
  4. the lowest gross profit.
• If inventory is being valued at cost, and the price level is steadily rising, discuss which of the three methods of costingFIFO, LIFO, or average costwill yield the lowest annual income tax expense.
• Recommend an inventory costing method for financial statement reporting purposes for Everest. Please explain your reasoning