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. If you use the 5% level of significance,what is the critical t-value?

A) +2.132
B) ±2.132
C) +2.262
D) ±2.228