Criado,

Since production costs are rising compared to previous periods, is it safe to say that FiFo is being used in the inventory account?

pmonica

Since the current cost of producing one lovesaet is higher than previous periods, is it safe to assume that FIFO is being used in the inventory account?

There can be an EXACT answer for this but I just can't get it for some reason that's why I wish to request you to re-post the original question including all of supplimentary information to make sure of our final conclusion.

But here's a quick guide. If Cost of one loveseat (ending) is equal to Cost of One seat (currently manufactured), then we are very certain that FIFO is being used (atleast to this problem).

In this problem, we are certain that it is not FIFO because:

Cost of one loveseat (ending) = $285
Cost of One seat (currently manufactured) = $326

Therefore, it has more inclination to LIFO and no possibility that FIFO was used.

Criado,

Sadly, there is no other information on this particular problem so I will choose LIFO and explain my thinking to the professor. Hopefully, he will accept that.

Once again, thanks for your help this week.

I have no idea what my assignment for next week will be like but I will definitely keep in touch again soon.

Have a great weekend,

pmonica

Thanks Pmonica!

Good luck and have a great weekend too. :)