Earl. co was formed on january 2,2007, to sell a single product. Over a 2 year period, earl's acquisition costs have increased steadily. Physical quantities held in inventory were equal to 3 months' sales at December 31, 2007, and 0 at December 31, 2008. Assuming the periodic inventory system, the inventory cost method which reports the highest amount of each of the following is: Inventory (december 31,2007) -FIFO COGS (2008)-FIFO. Can someone please explain me why FIFO reports higher Inventory 2007 & higher COGS in 2008.