Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

Multiple Choice

Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO (last in first out) or FIFO (first in first out) . A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference,they computed FIFO − LIFO for each product. We would like to determine if the LIFO method results in a lower cost of inventory than the FIFO method. What is the null hypothesis?

A) H₀: µ_d = 0
B) H₀: µ_d ≠ 0
C) H₀: µ_d ≤ 0
D) H₀: µ_d ≥ 0