Answer these questions in your own words:

a. Why does FIFO produce the lower cost of goods sold during a period of rising prices?

b. Why does moving-weighted-average costing produce the higher cost of goods sold during a period of rising prices?

c. Which inventory costing method—FIFO or moving-weighted-average—results in the higher and the lower cost of ending inventory? Prices are rising. Exhibits 6–3 and 6–4 provide the necessary information.

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EXHIBIT 6-3 | Perpetual Inventory Record-FIFO Cost for Chai Tea Boxes 1 2 3 4 5 A B Chai Tea Boxes Nov. 1 5 Purchases Date Qty. Unit Cost Total Cost 6 7 8 9 10 11 12 13 Ending 15 26 30 60 70 C 130 X $11 D X $12 = $ 660 = $840 $1,500 E 30 10 20 F 90 40 50 120 Cost of Goods Sold Qty. Unit Cost Total Cost Qty. 10 10 60 X $10 X $11 G X $11 X $12 = $ 100 = $ 220 H = $ 440 = $ 600 $1,360 40 40 70 20 20 I Inventory on Hand Unit Cost Total Cost X $10 = $100- × $10 = $100 x $11 = $660 X $11 X $11 X $12 J X $12 = $440 = $440 = $840 = $240 $240 Beginning inventory $760 → $1,280 Ending inventory