Consider the following inventory data for the first two months of the year for CompX International:

Required
1. Calculate the cost of goods sold and ending inventory for January and February under each of the following methods, assuming use of a perpetual inventory management system:

a. FIFO

b. LIFO

c. Weighted-average

2. Assume that the replacement cost of CompX International’s ending inventory is \($2.05\) per unit on January 30 and \($2.35\) per unit on February 28. Calculate the value of the ending inventory for January and February under each of the following methods:

a. FIFO

b. LIFO

c. Weighted-average 3. Which method—FIFO, LIFO, or the weighted-average cost method—should CompX International use when reporting its financial results to its shareholders? Why? How does this decision constrain the company’s method selection for income tax reporting?

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Total Units Unit Cost Total Cost Beginning inventory on hand. January 1 Purchases during month January 5 January 20... 60,000 $2.00 $ 120,000 103,600 2.00 293,900 2.10 207,200 617,190 457,500 $ 944,390 Sales of inventory January 25.... 383,900 Beginning inventory at February 1...... 73,600 Purchases during month February 8 282,200 2.20 $ 620,840 February 23. 153,500 2.60 509,300 399,100 $1,019,940 Sales of inventory February 27 Ending Inventory 407,600 101,700