Please help, accounting problem with LIFO. I also have other information & invoices that pertain to this problem, & other problems as well, which I can provide if you understand this. (: Thanks!

You are auditing the retailer ACME International December 31, 201X inventory balances. As part of the audit of inventory, you are conducting a price-test to determine if inventory is properly valued. Ending inventory on the balance sheet at December 31, 201X is currently stated as $940,000. The inventory cost-flow methodology used is FIFO taking in consideration of lower of cost or market (LCM). LCM is computed on a product by product basis and layer by layer. You can assume that replacement cost is in-between net realizable value and net realizable value less a normal profit margin. Freight is part of the cost of your product and is allocated based on the quantity shipped.

Out of the many products that ACME sells, you have selected a sample of two products which are to represent all products that ACME sells. You have pulled the four attached invoices to help with your testing. The products you have selected from testing both from the same supplier are 12" Widgets and 2" Gizmos. Type in your answers and calculations following each question - do not turn in invoices.

1. Testing of 2" gizmos: Included in the December 31, 201X, recorded inventory of gizmos at ACME International are 210 of 2" gizmos in the amount of $1,250. Using the attached invoices, what is the misstatement in valuation of the December 31, 201X, inventory for 2" gizmos, assuming FIFO inventory valuation (2 points)? Is inventory overstated or understated (1 point)?