The following information is provided for Exlou Ltd. (Exlou):

Required:

a. Calculate ending inventory on December 31, 2014 and 2015, and cost of sales and gross margin for the years ended December 31, 2014 and 2015 for Exlou using FIFO and average cost. Assume that Exlou uses a periodic inventory control system.

b. Explain the results you obtained in (a). Do you find anything unusual about the amounts you calculated for ending inventory, cost of sales, and gross margin under each of the cost formulas?

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Number of units Purchase price Selling price per unit per unit Inventory on hand on January 1, 2014 60,000 $25 Inventory purchases during 2014 280,000 25 Inventory purchases during 2015 310,000 25 Sales during 2014 300,000 $45 Sales during 2015 290,000 45