Question 1: Inventory cost assignment (17 marks)

Green Plus Ltd has the following information that relates to the entitys inventory record in the month of April.

April		Units	Unit cost	Total cost
1	Beginning inventory	300	$ 3.00	$ 900
12	Purchases	600	2.80	1 680
24	Purchases	700	2.70	1 890
		1 600		$ 4 470
16	Sales	300
29	Sales	600

Green Plus Ltd uses the perpetual inventory system. Selling price for each unit is $4.00. A physical inventory count on 30 April showed that 600 units were on hand. Ignore GST.

Required

1. Calculate the cost of sales using the following methods:

1. FIFO
2. LIFO (4 marks)

2. Calculate gross profit for the month of April based on each of the two methods used in requirement 1. (4 marks)
3. Based on your results in requirement 2, state which cost flow method resulted in the highest gross profit. Discuss your answer - why does this costing method lead to the highest gross profit? (3 marks)
4. If Green Plus used the periodic inventory system instead, discuss whether cost of sales would be the same as in requirement 1 under FIFO. (3 marks)
5. If Green Plus used the periodic inventory system instead, discuss whether cost of sales would be the same as in requirement 1 under LIFO. (3 marks)