Accounting Procedures Allow a Business to Evaluate Its Inventory Costs

Multiple Choice

Accounting procedures allow a business to evaluate its 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 value of calculated t?

A) +0.933
B) ±2.776
C) +0.47
D) −2.028