(b) The requirement is to determine which inventory
method requires estimates of price level changes for specific inventories.
In accordance with the dollar-value LIFO method, the
ending inventory is first converted to the base year cost so that the
incremental layers can be determined. The incremental layers are
then restated using the price index which was in effect at the time
each of the layers were added to the inventory. Thus, the specific
layers of the ending inventory are adjusted to the current price
level. Therefore, answer (b) is correct. Answers (a), (c), and (d)
are incorrect because these methods do not specifically adjust for
price level changes.