Willy World Began Using Dollar-Value LIFO for Costing Its Inventory

question 3

Multiple Choice

Willy World began using dollar-value LIFO for costing its inventory two years ago.The ending inventory for the past two years in end-of-year dollars was $100,000 and $150,000 and the year-end price indices were 1.0 and 1.2, respectively.Assuming the current inventory at end of year prices equals $215,000 and the index for the current year is 1.25, what is the ending inventory using dollar-value LIFO?

• A)$177,500.
• B)$186,400.
• C)$190,000.
• D)$188,750.

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Definitions:

Produced Units

The number of units of product that have been completed during a specific time period, regardless of whether they have been sold.

Factory Overhead

Another term for manufacturing overhead, encompassing all indirect costs involved in the production process.

Fixed Costs

Costs that remain constant regardless of the level of production or sales activities, such as lease payments and salaries.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors remain valid.