Root Beer Company had 200 units in beginning inventory at a total cost of $16,000. The company purchased 100 units at a total cost of $11,000. At the end of the year, Root Beer had 70 units in ending inventory.

Instructions:

D. Which cost flow method would result in Root Beer paying the least taxes in the first year?

E. Suppose Root Beer decides at year-end that they want to report a lower net income. Would they be able to

manipulate net income when using FIFO or LIFO?