Sweet Treats Is Considering a Change in Its Inventory Valuation

question 101

Multiple Choice

Sweet Treats is considering a change in its inventory valuation method.Sweet Treats currently uses the FIFO method and is considering a change to the LIFO method.Sweet Treats started the year on January 1 with inventory at a FIFO cost of $31,000 and a LIFO cost of $26,500.The ending inventory on December 31 is $29,650 at FIFO cost and $25,800 at LIFO cost.Cost of goods sold under the LIFO basis is $74,600 for the current year.The LIFO effect is ________.

• A)$4,500
• B)$3,800
• C)$8,350
• D)$650

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Definitions:

Productivity Restriction

Limitations or constraints that reduce the efficiency or output of work processes, often resulting in decreased organizational performance.

Habitually Underestimate

The consistent tendency to assess situations, abilities, or outcomes as less significant or valuable than they actually are.

Pay Secrecy

The practice of employers not disclosing or discussing the salary details among employees to maintain privacy or avoid conflict.

Scanlon Plan

A participative management approach focusing on employee involvement in improving productivity and sharing the resulting cost savings as bonuses.