Simple Plan Enterprises uses a periodic inventory system. Its records showed the following:
Inventory, December 31, using FIFO â†' 38 Units @ $ 14 = $ 532
Inventory, December 31, using LIFO â†' 38 Units @ $ 10 = $ 380
Required:
1. Compute the number and cost of goods available for sale, the cost of ending inventory, and the cost of goods sold under FIFO and LIFO.
2. Compute the inventory turnover ratio under the FIFO and LIFO inventory costing methods (show computations).
3. Based on your answer to requirement 2, explain whether analysts should consider the inventory costing method when comparing companies' inventory turnover ratios.