At the beginning of the current period, chen carried 1,000 units of its product with a unit cost of $40. a summary of purchases during the current period follows. during the period, chen sold 2,800 units.

units unit cost cost
beginning inventory 1,000 $ 40 $ 40,000
purchase #1 1,800 44 79,200
purchase #2 800 52 41,600
purchase #3 1,200 58 69,600

which of these three inventory costing methods would you choose to:

1. reflect what is probably the physical flow of goods?
(a) lifo
(b) fifo
(c) average cost

2. minimize income taxes for the period?
(a) lifo
(b) fifo
(c) average cost

3. report the largest amount of income for the period?
(a) lifo
(b) fifo
(c) average cost

1. Reflect what is probably the physical flow of goods?

(A) LIFO                     146200    

(B) FIFO                     119600

(C) Average Cost      134400

2. Minimize income taxes for the period?

(A) LIFO                 higuer Cost less tax

(B) FIFO                      

(C) Average Cost

3. Report the largest amount of income for the period?

(A) LIFO

(B)   FIFO lower cost higuer income

(C) Average Cost

Explanation:

FIFO                  UnitC/UnitC/inventory  Cost

Beggining Inve10004040000100040000

Purchase         18004479200180079200

Purchase          800524160000

Purchase         1200586960000

                       4800  2304002800119200

                                            2800119200

LIFO                        UnitC/UnitC/inventory  Cost

Beggining Inve100040400000  0

Purchase         18004479200800   35200

Purchase          8005241600800   41600

Purchase          120058696001200  69600

                         4800  2304002800 146400

                                           2800  146400

AVERAGEUnitC/UnitC/inventory  Cost

Beggining Inve1000404000000

Purchase18004479200  0

280043119200  

Purchase8005241600  0

360045160800  

Purchase12005869600  0

4800482304002800134400

   2800134400

lots of credit card rewards

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.