The Habicht Company was formed in 2009 to produce a single product. The production and sales for the next four years were as follows:
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Required:
1. Determine the gross profit for each year under each of the following periodic inventory methods:
a. FIFO
b. LIFO
c. Average cost (round unit costs to 3 decimal places)
2. Explain whether the company's return on assets (net income divided by average total assets, as we discussed in Chapter 6) would be higher under FIFO or LIFO.