You work for a CPA firm that has been hired by Widget Tek Inc., a merchandising company that is getting ready to expand. The president of Widget Tek Inc. is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the company's accounting records.

As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average.

Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter "Highest", "Lowest", or leave the box blank.

Study the inventory record for March and answer the questions that follow.
1. assuming that the product sells for $160 and that 80% of sales are on account, determine the gross profit from sales for March. ______
2. making the same assumptions as in (1), determine the ending inventory cost for March. _____
3. Which inventory method is being used?

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Cost of Ending Merchandise Net Merchandise Sold Income Inventory LIFO, when prices are falling FIFO, when prices are rising Weighted average, when prices are rising Weighted average, when prices are falling LIFO, when prices are rising FIFO, when prices are falling Inventory Date Quantity Unit Cost Total Cost Mar. 1 850 $98.00 $83,300 1,275 $95.00 $121,125 Mar. 8 Mar. 11 650 $98.00 $63,700 325 $98.00 $31,850 Mar. 14 325 $98.00 $31,850 780 $103.00 $80,340 Mar. 22 Mar. 25 260 $98.00 $25,480 260 $98.00 $25,480 1,600 $100.00 $160,000