Interpreting inventory disclosures. Olin Corporation is a diversified chemicals, metals, and aerospace company. Its annual report discloses inventories under LIFO of \(\$ 320\) million at the beginning of the year and \(\$ 329\) million at the end of the year and cost of goods sold of \(\$ 2,161\) million for the year. If the firm had used a FIFO cost flow assumption, its beginning inventory would have been \(\$ 501\) million and its ending inventory would have been \(\$ 474\) million. Sales for the year totaled \(\$ 2,423\) million.

a. Compute the amount for cost of goods sold for the year assuming Olin Corporation had used a FIFO instead of a LIFO cost flow assumption.

b. Did the quantities of items in inventory increase or decrease during the year? Explain.

c. Did the cost of items in inventory increase or decrease during the year? Explain.

d. Compute the inventory turnover ratio for Olin Corporation under both LIFO and FIFO for the year.

e. Why does the inventory turnover ratio under LIFO exceed that under FIFO?

f. "The choice of inventory cost flow assumption affects the inventory turnover ratio but should not normally affect the accounts payable turnover ratio." Explain.