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. What are the degrees of freedom?
A)4
B)5
C)15
D)10

Question

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.  What are the degrees of freedom?
A)4 
B)5 
C)15 
D)10

Quizplus · Accepted Answer

The Answer of 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.  What are the degrees of freedom?
A)4 
B)5 
C)15 
D)10

Accounting Procedures Allow a Business to Evaluate Their Inventory Costs