ACT $1010$A:FALL $2023$ ASSIGNMENT FOUR

Q$\mathrm{.}1$ Multiple choice: Comparison of inventory methods: $($For Questions $1-5$ below$)$

INVENTORY

LOWER OF

The Berg Corporation began business on January $1,2020.$ Information about its inventories under different

valuation methods in shown above. Using this information, you are to choose the phrase $(1-5$ below only$)$

that best answers each of the following questions:

The inventory basis that would show the highest net income for $2020$ is:

a$.$ LIFO cost

b$.$ FIFO cost

c$.$ Market

d$.$ Lower of cost or market

The inventory basis that would show the highest net income for $2021$ is:

a$.$ LIFO cost

b$.$ FIFO cost

c$.$ Market

d$.$ Lower of cost or market

The inventory basis that would show the lowest net income for the three years combined is:

a$.$ LIFO cost

b$.$ FIFO cost

c$.$ Market

d$.$ Lower of cost or market

For the year $2021,$ how much higher or lower would profits be on the FIFO cost basis than on

the lower$-$of$-$cost$-$or market basis?

a$.$ $$400$ higher

b$.$ $$400$ lower

c$.$ $$600$ higher

d$.$ $$600$ lower

e$.$ $$1,000$ higher

f$.$ $$1,000$ lower g$.$ $$1,400$ higher

h$.$ $$1,400$ lower

On the basis of the information given, it appears the movement of prices for items in the

inventory was:

a$.$ Up in $2020$ and down in $2022$ b$.$ Up in both $2020$ and $2021$

c$.$ Down in $2020$ and up in $2022$ d$.$ Down in both $2020$ and $2022.$

During the current year, Playground Specialists purchased BigGym redwood playground sets at

following dates and acquisition costs:

Date

Units

Assume that Playground Specialists uses a periodic inventory systems and a Weighted$-$Average Cost

costing procedure. Fill in the blank for:

a$.$ The Ending Inventory of BigGym playground sets at December $31$