The management of Winterthur Co. asks your help in determining the comparative effects of the FIFO and average-cost inventory cost how methods, for 2011, the accounting records show the following data.
Inventory, January 1 (10,000 units) ......CHF 35,000
Cost of 100,0000 units purchased ...... 532,500
Selling price of 80,000 units sold ....... 700,000
Operating expenses ............. 140,000
Units purchased consisted of 35,000 units at CHF5.10 on May 10; 35,000 units at CHF5.30 on August 15; and 30.000 units at CHF5.60 on November 20. Income taxes arc 30%.

Instructions
(a) Prepare comparative condensed income statements for 2011 under FIFO and average-cost. Show computations of ending inventory.)
(b) Answer the following questions for management.
(1) Which inventory cost flow method produces the most meaningful inventory amount for the statement of financial position? Why?
(2) Which inventory cost flow method is most likely to approximate actual physical flow of the goods? Why?
(3) How much additional cash will be available for management under average-cost than under FIFO? Why?