after year end, jane decides she can make more money by improving machines b and d. she buys and uses 10 of parts and supplies, and it takes 6 hours at 2 per hour to make the improvements to each machine. jane has overhead, including rent and electricity. she calculates that the overhead adds 0.5 per hour to her costs. thus, jane has spent 20 to improve each machine (10/2 + 12 + (6 x 0.5) ). she sells machine d for 45. her cost for that machine depends on her inventory method. if she used fifo, the cost of machine d is 12 plus 20 she spent improving it, for a profit of 13. remember, she used up the two 10 cost items already under fifo. if she uses average cost, it is 11 plus 20, for a profit of 14. if she used lifo, the cost would be 10 plus 20 for a profit of 15.