Effect of FIFO and LIFO on income statement and balance sheet. Hanover Oil Products (HOP) operates a gasoline outlet. It commenced operations on January 1, 2008. It prices its gasoline at 10% above its average purchase price for gasoline. Purchases of gasoline during January, February, and March appear next:

Sales for each month were as follows:
January: $20,840 (13,000 gallons)
February: $35,490 (22,000 gallons)
March: $28,648 (17,000 gallons)
a. Compute the cost of goods sold for January using both a FIFO and a LIFO cost-flow assumption.
b. Repeat part a for February.
c. Repeat part a for March.
d. Why does the cost-flow assumption that provides the largest cost of goods sold amount change each month?
e. Compute the cost of goods sold percentage for each month using both a FIFO and a LIFO cost-flow assumption.
f. Which cost-flow assumption provides the most stable cost of goods sold percentage over the three months? Explain why this is the case.
g. HOP deliberately allowed its inventory to decline to 1,000 gallons at the end of March because of the high purchase cost. Assume for this part that HOP had purchased 6,000 gallons on March 26 instead of 4,000, thereby maintaining an ending inventory equal to the beginning inventory for the month of 3,000 gallons. Compute the amount of cost of goods sold for March using both a FIFO and a LIFO cost-flow assumption. Why are your answers the same as, or different from, those in part c above?Explain.

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Acquisition Cost Gallons Purchased Unit Price $ 5,600 January 1 $1.40 4,000 .... January 13. 8,760 6,000 1.46 January 28. 5,000 15,000 1.50 7,500 Total.. $21,860 Gallons Purchased Acquisition Cost Unit Price February 5 7,000 $1.53 $10,710 ..... February 14 February 21 6,000 1.47 8,820 10,000 23,000 1.42 14,200 Total... $33,730 Acquisition Cost Gallons Purchased Unit Price $ 8,880 March 2 6,000 $1.48 .... March 15 5,000 1.54 7,700 March 26 6,400 4,000 1.60 Total.. 15,000 $22,980