Which product is more likely to be sold using a last-in, first-out inventory approach?

Which product is more likely to be sold using a last-in, first-out inventory approach?

• A. Salmon portions
• B. Jar of spaghetti sauce
• C. Brick of cheddar
• D. Deli meat cuts

Answer: (B)

Last-in, first-out assigns the most recently acquired costs to the cost of goods sold. This approach works best for items that don’t spoil quickly, so newer costs hit the income statement while older costs stay in ending inventory. A jar of spaghetti sauce is shelf-stable and has a long shelf life, making LIFO a reasonable choice for its inventory. In contrast, salmon portions, deli meat cuts, and cheddar are highly perishable, so stores typically use a first-in, first-out approach to minimize spoilage by selling older stock first. Therefore, the jar of spaghetti sauce is most likely to be managed with a last-in, first-out method.

Last-in, first-out assigns the most recently acquired costs to the cost of goods sold. This approach works best for items that don’t spoil quickly, so newer costs hit the income statement while older costs stay in ending inventory. A jar of spaghetti sauce is shelf-stable and has a long shelf life, making LIFO a reasonable choice for its inventory. In contrast, salmon portions, deli meat cuts, and cheddar are highly perishable, so stores typically use a first-in, first-out approach to minimize spoilage by selling older stock first. Therefore, the jar of spaghetti sauce is most likely to be managed with a last-in, first-out method.