PQR Ltd. uses the FIFO method for inventory costing. For the fiscal year ended December 31, 2023, the following data is provided:

• Beginning Inventory: 1,500 units at $22 per unit
• Purchases:
  • April 1: 2,000 units at $24 per unit
  • September 1: 2,500 units at $26 per unit

• Sales:
  • 5,000 units sold during the year

• Ending Inventory: 1,000 units

a. Calculate the cost of goods sold (COGS) using the FIFO method under an inflation scenario where costs rise by 10%. b. Determine the value of ending inventory under the same inflation scenario. c. Prepare an adjusted income statement reflecting the impact of inflation on FIFO-based financials. d. Discuss the strategic implications for PQR Ltd. if the inventory costs had decreased by 5% instead. e. Analyze how PQR Ltd.'s financial ratios would differ in an inflationary versus a deflationary environment. f. Evaluate the effectiveness of FIFO in managing inventory costs during periods of economic volatility.