Renfro Inc was franchised on January 1 2016 At the
Renfro, Inc. was franchised on January 1, 2016. At the end of its third year of operations, December 31, 2018, management requested a study to determine what effect different materials inventory costing methods would have had on its reported net income over the three-year period.
The materials inventory account, using LIFO, FIFO, and weighted average, would have had the following ending balances:
a. Assuming the same number of units in ending inventory at the end of each year, were material costs rising or falling from 2016 to 2018?
b. Which costing method would show the highest net income for 2017?
c. Which method would show the lowest net income for 2018?
d. Which method would show the highest net income for the three years combined?
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