Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

question 39

Multiple Choice

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 is the alternate hypothesis?

• A)H₁: µ_d = 0
• B)H₁: µ_d ≠ 0
• C)H₁: µ_d ≤ 0
• D)H₁: µ_d > 0

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