Problem - The following information pertains to Baxter for 2014.
Beginning inventory - 55 units @ $15
Units purchased - 260 units @ $19
Ending inventory consisted of 27 units. Baxter sold 288 units at $31 each. All purchases and sales were made with cash.
Required -
a. Compute the gross profit margin for the Baxter Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average.
b. What is the dollar amount of difference in net income between using FIFO versus LIFO?
c. Determine the cash flow from operating activities, using each of the three cost flow assumptions listed in part a. Ignore the effect of income taxes.