On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $100,700. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end	Ending inventory at year-end costs				Cost Index
2021	$	128,205				1.05
2022		146,080				1.10
2023		156,540				1.20

In determining the inventory balance for Badger to report in its 12/31/2022 balance sheet:

Multiple Choice

• An additional layer of $11,770 is added to the 12/31/2021 balance.

  Correct

• An additional layer of $23,770 is added to the 12/31/2021 balance.

• An additional layer of $22,770 is added to the 12/31/2021 balance.

• None of these answer choices are correct.

Explanation

$146,080 1.10 = $132,800. This includes the previous two layers, the first at $100,700 and the second at $21,400, plus another at $10,700. The third layer is added to the 12/31/2021 inventory balance as $10,700 1.10 = $11,770.

Could someone please explain on this how 11,770 cam up step by step.