TAD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is replacement cost, which one of the following statements is true?

Multiple Choice

• Replacement cost is greater than historical cost.

• Historical cost is less than replacement cost.

• Replacement cost is greater than net realizable value less a normal profit margin.

• Net realizable value is greater than historical cost.

Manero Company included the following information in its annual report:

	20X3				20X2				20X1
Sales	$	178,400			$	162,500			$	155,500
Cost of goods sold		115,000				102,500				100,000
Operating expenses		50,000				50,000				45,000
Operating income		13,400				10,000				10,500

In comparison to year 20X2, the increase in operating income of 20X3 was primarily caused by the effect of margin increase of (ignore taxes):

Multiple Choice

• $1,194.

• $3,400.

• $978.

• $2,422.