MusicBiz.net Ltd. specializes in sound equipment. Because each inventory item is expensive, MusicBiz uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicBiz should report for cost of goods sold and ending inventory in the following two ways: a. FIFO b. Weighted-average cost 2. MusicBiz uses the FIFO method. Prepare MusicBiz s income statement for the month ended June 30, 2017, reporting gross profit. Operating expenses totaled $319, and the income tax rate was 25%. 3. Music Biz is thinking of changing inventory costing methods from FIFO to weighted-average cost. Are they allowed to make this change? Briefly explain.
