# Question: Use the following information to complete this exercise sales 550

Use the following information to complete this exercise: sales, 550 units for \$ 12,500; beginning inventory, 300 units; purchases, 400 units; ending inventory, 150 units; and operating expenses, \$ 4,000. Begin by setting up the following table and then complete the requirements that follow.
Required:
1. Complete the table for each situation. In Situations A and B (costs rising), assume the following: beginning inventory, 300 units at \$ 12 = \$ 3,600; purchases, 400 units at \$ 13 = \$ 5,200. In Situations C and D (costs falling), assume the opposite; that is, beginning inventory, 300 units at \$ 13 = \$ 3,900; purchases, 400 units at \$ 12 = \$ 4,800. Use periodic inventory procedures.
2. Describe the relative effects on Income from Operations as demonstrated by requirement 1 when costs are rising and when costs are falling.
3. Describe the relative effects on Income Tax Expense for each situation.

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