The company's board of directors is re-evaluating the current average pricing method, reviewing the business performance of the past 6 months using FIFO, LIFO pricing methods. Accounting figures for the past 6 months are as follows:
1. Inventory at the beginning of the period: 10,000 units, worth $ 22,500
2. End-of-period inventory: 20,000 units
3. Total Net sales: $862,000
4. Total value of purchases: 230,000 units, valued at $567,500.
Details of purchases are in the following order:
60,000 units with unit price 2.30$
50,000 units with unit price 2.40$
50,000 units with unit price 2.55$
70,000 units with unit price 2.60$
5. Business Expenses: $147,000
6. 20% CIT rate
Requirement: a. Prepare business management reports for each AVG, FIFO, LIFO
b. pricing method. Send a letter to the Board of Directors explaining briefly the differences in figures between the methods, thereby advising them which pricing method to choose.
