Response to the following questions:
1. Can a company change its method of costing inventory? Explain.
2. Does the term last-in in the lifo method mean that the items in the inventory are assumed to be the most recent (last) acquisitions? Explain.
3. If merchandise inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing-fifo, lifo, or average cost-will yield (a) the highest inventory cost, (b) the lowest inventory cost, (c) the highest gross profit, (d) the lowest gross profit?