Alpha Corp operates in a period of rising prices (inflation). The company began the year with 10 units @ $10.
During the year, it made two purchases:
Purchase 1: 50 units @ $12
Purchase 2: 50 units @ $14
At the end of the year, 30 units were left in ending inventory.
The company is deciding whether to use FIFO (First-In, First-Out) or LIFO (Last-In, First-Out) for inventory valuation.
Question 1 of 3
Under FIFO, what is the value of the ending inventory?
Question 2 of 3
Under LIFO, what is the value of the ending inventory?
Question 3 of 3
In this inflationary period, which method results in a higher Cost of Goods Sold (COGS) and lower Net Income?