Texas Instruments is a major producer of semiconductors and other electrical and electronic products. Semiconductors are especially vulnerable to price fluctuations. The following are from the company’s annual report ($ in millions):

Texas Instruments uses a variety of inventory methods, but for this problem assume it uses only FIFO.

Summary of costs to account for is as follows:
Beginning inventory ........$ 400
Purchases ............ 1,580
Cost of goods available for sale ....$1,980
Other expenses for this product ....$ 600
Income tax rate, 40%
1. Prepare a comparative income statement for the 2011 fiscal year for the product in question. Use the FIFO, LIFO, and average cost inventory methods. Remember that when a periodic inventory system is used the average cost method is known as weighted-average cost.
2. By how much would income taxes have differed if Texas Instruments had used LIFO instead of FIFO for this product?
3. Suppose Texas Instruments had used the specific identification method. Compute the gross margin (or gross profit) under two different scenarios; if the ending inventory had consisted of
(a) 90 units @ $8 and 20 units @ $7,
(b) 60 units @ $5 and 50 units @$8.

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December 31 2011 2010 Inventories $1,788 $1.,520 Purchases Sales (units) Balance 80@ $5 400 December 31, 2010 February 25, 2011 March 29 May 28 June 7 November 20 December 15 Total December 31, 2011 Selling prices were $11, $12, and $13, respectively. 50@ $6 300 80 $7$560 90 @ $8-720 $1,580 60 90 40 220 190 110@? 60 @ $11 90 12 40 13 $ 660 1,080 520 $2,260 Total sales 190