Big Fish Tackle Co. Ltd. reports the following inventory transactions for its fishing rods for the month of April. The company uses a perpetual inventory system.

Instructions
(a) Determine the cost of goods sold and cost of ending inventory using FIFO.
(b) Assume that Big Fish Tackle wants to change to the average cost method. What guidelines must it consider before making this change?
(c) If the company does change to the average cost method and prices continue to rise, would you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts when using FIFO?

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Date Explanation Apr.1 Beginning inventory Units 50 35 (55) 40 (50) 30 Unit Cost $230 240 Total Cost $11,500 6 Purchases 9 Sales 14 Purchases 20 Sales 28 Purchases 8,400 245 9,800 250 7,500