Refer to the facts in problem 7. In its second year of operations, XYZ manufactured 2,000 units of product and incurred $410,000 direct material cost and $275,000 direct labor costs. For financial statement purposes, XYZ capitalized $139,000 indirect costs to inventory. For tax purposes, it had to capitalize $193,000 indirect costs to inventory under the unicap rules. At the end of its second year, XYZ held 300 items in inventory. Compute XYZ’s cost of goods sold for book purposes and for tax purposes assuming that:
a. XYZ uses the FIFO costing convention.
b. XYZ uses the LIFO costing convention.