QP Corp. sold 4,000 units of its product at $50 per unit in year 2015 and incurred operating expenses of $5 per unit in selling the units.

It began the year with 700 units in inventory and made successive purchases of its product as follows.

Jan.   1 Beginning inventory   . . . . . . . .  700 units @ $18.00 per unit

Feb. 20 Purchase  . . . . . . . . . . . . . . . . .  1,700 units @ $19.00 per unit

May 16 Purchase  . . . . . . . . . . . . . . . . .  800 units @ $20.00 per unit

Oct.  3 Purchase  . . . . . . . . . . . . . . . . .  500 units @ $21.00 per unit

Dec. 11 Purchase  . . . . . . . . . . . . . . . . .  2,300 units @ $22.00 per unit

Total . . . . . . . . . . . . . . . . . . . .  6,000 units

Required 1. Prepare comparative income statements similar to Exhibit 6.8 for the three inventory costing methods of FIFO, LIFO, and weighted average. (Round all amounts to cents.)

Include a detailed cost of goods sold section as part of each statement. The company uses a periodic inventory system, and its income tax rate is 40%.

2. How would the financial results from using the three alternative inventory costing methods change if the company had been experiencing declining costs in its purchases of inventory?

3. What advantages and disadvantages are offered by using (a) LIFO and (b) FIFO? Assume the continuing trend of increasing costs.