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Sweet Milk Inc uses the last in, first out (LIFO) inventory method and had 5,000 units of beginning inventory on January 1, 2002, that was valued at $10.00 a unit. The company purchased 50,000 units at $12 a unit and sold 52,000 units at $15 a unit. Sweet Milk is considering an additional purchase of 10,000 units at $13 a unit. The company will make the purchase at the end of December or in the early part of year 2003. Which statement about the effect of the purchase decision on net income is most accurate? A. Making the purchase in December will increase income by $16,000 in year 2002. B. Income for year 2002 will not be affected no matter when the inventory is purchased. C. Postponing the purchase until January will increase income for 2002 by $14,000. |