The following data relates to the inventory and purchases of item 125 for Sanders Company during May:

Inventory, May 1_____________260 units at $21.00

Purchases:

May 10.................................190 units at $20.75

May 19.................................140 units at $20.35

May 25.................................160 units at $20.40

Inventory, May 31................................230 units

INSTRUCTIONS

Determine the cost of the ending inventory on May 31 under each of the following methods:

(a) Average cost method;

(b) First in, first out (FIFO) method; and,

(c) Last in, first out (LIFO) method. When using the average cost method, compute the unit cost to two decimal places.

Analyze:

Which inventory amount will result in the highest income for the period?