Question

Refer to the preceding problem. Suppose the Dell division acquired 50 extra computers at $700 each on February 2, 2012, at a total additional cost of $35,000. How would gross profit and income taxes be affected under FIFO (that is, compare FIFO results before and after the purchase of 50 extra computers) and under LIFO (that is, compare LIFO results before and after the purchase of 50 extra computers)? Show computations and explain.
In preceding problem, Dell Computer Company produces computers. The following data and descriptions are from the company’s annual report ($ in millions):


Assume that Dell uses the periodic inventory system. Suppose a division of Dell had the accompanying data concerning the purchase and resale of computers ($ are not inmillions):


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  • CreatedFebruary 20, 2015
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