In periods of rising prices, the ending inventory using the FIFO cost formula will be

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Quizplus · Accepted Answer

In periods of rising prices, the ending inventory using the FIFO cost formula will be higher than using the weighted average cost method because FIFO assigns the recent and higher costs to units sold first, which results in older and lower costs being assigned to ending inventory. This leads to a higher value of ending inventory compared to weighted average cost method, which considers all costs equally.

In Periods of Rising Prices, the Ending Inventory Using the FIFO