Inventory Costing Methods—Periodic System
Oxendine Company’s inventory records for the month of November reveal the following:
Selling and administrative expenses for the month were $10,800. Depreciation expense was
$4,000. Oxendine’s tax rate is 35%.
1. Calculate the cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system: (a) FIFO, (b) LIFO, and (c) weighted average.
2. Calculate the gross profit and net income under each costing assumption.
3. Under which costing method will Oxendine pay the least taxes? Explain your answer.