Midori Company merchandises a single product called Gloss. The following data represent beginning inventory and purchases of Gloss during the past year: January 1 inventory, 68,000 units at $11.00; February purchases, 80,000 units at $12.00; March purchases, 160,000 units at $12.40; May purchases, 120,000 units at $12.60; July pur- chases, 200,000 units at $12.80; September purchases, 160,000 units at $12.60; and November purchases, 60,000 units at $13.00. Sales of Gloss totaled 786,000 units at $20.00 per unit. Selling and administrative expenses totaled $5,102,000 for the year. Midori uses the periodic inventory system.
Required:
1. Prepare a schedule to compute the cost of goods available for sale.
2. Compute income before income taxes under each of the following inventory cost flow assumptions: (a) the average-cost method, (b) the FIFO method, and (c) the LIFO method. (Round cost to the nearest cent.)
3. Compute inventory turnover and days' inventory on hand under each of the inventory cost flow assumptions listed in requirement 2. (Round to one decimal place.) What conclusion can you draw?