# Inventory Costing Methods Terpsichore Company uses a perpetual inventory system. For 2018 and 2019, Terpsichore has the following data: Required: 1. For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using FIFO. 2. For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using LIFO. 3. For each year, compute cost of goods sold, the cost of ending inventory, and gross margin using the average cost method. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest dollar.) 4. CONCEPTUAL CONNECTION Which method would result in the lowest amount paid for taxes? 5. CONCEPTUAL CONNECTION Which method produces the most realistic amount for income? For inventory? Explain your answer. 6. CONCEPTUAL CONNECTION Compute Terpsichore’s gross profit ratio and inventory turnover ratio under each of the three inventory costing methods. ( Note: Round answers to two decimal places.) How would the choice of inventory costing method affect these ratios?

### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

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Chapter 6, Problem 68BPSB
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