AAA Hardware uses the LIFO method to value its inventory. Inventory at the begin
ID: 2453710 • Letter: A
Question
AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year consisted of 24,000 units of the company’s one product. These units cost $15 each. During the year, 74,000 units were purchased at a cost of $18 each and 81,000 units were sold. Near the end of the fiscal year, management is considering the purchase of an additional 9,500 units at $18.
1.What would be the effect of this purchase on income before income taxes?
2.What would be the effect of this purchase on income before income taxes using FIFO method?
Explanation / Answer
AAA Hardware uses the LIFO method to value its inventory. Inventory at the begin