contrast the 3 inventory cost-flow assumptions (LIFO, FIFO, average cost). Which one of the three inventory...
contrast the 3 inventory cost-flow assumptions (LIFO, FIFO,
average cost).
Which one of the three inventory cost-flow assumptions leads to
higher net income in an inflationary environment?
Homework Answers
Under inflationary environment, FIFO method leads to higher net income out of the three inventory cost-flow assumptions. As FIFO method means first-in, first-out, those inventories which are purchased earlier will be sold earlier and the inflationary environment means the prices are increasing.
If the company wants higher net income that means the cost of goods sold will be lowest and in case of inflationary environment, when FIFO method will be used those inventories which are purchased at lower cost will be sold earlier by which the cost of goods sold of the company will be lowest as compared to LIFO and average cost method, which leads to higher gross profit and higher net income.
So, the answer is FIFO method
FIFO method lead to higher net income in an inflationary environment out of the 3 inventory cost-flow assumptions (LIFO, FIFO, average cost).
Add Answer to:
contrast the 3 inventory cost-flow assumptions (LIFO, FIFO,
average cost).
Which one of the three inventory...
Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO...
Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-6 (The following information applies to the questions displayed below.] The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 90 units 310 units @ @ $40 $45 Ending inventory consisted of 30 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4100. a. Compute the gross margin for Mason...
Required information Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross...
Required information Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-6 (The following information applies to the questions displayed below.] The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 140 units 290 units @ @ $40 $45 Ending inventory consisted of 60 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4100. Exercise 5-19 Part a Required...
Required information Exercise 5-4A Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross...
Required information Exercise 5-4A Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 51 (The following information applies to the questions displayed below! The following information pertains to Mason Company for Year 2 Beginning inventory Units purchased 16 units $53 $126 eachi All purchases and sales were made with cash Ending inventory consisted of 54 units Mason solo 292 Operating expenses amounted to $3825 Required Compute the gross margin for Mason Company using the following...
Chapters 5 &6 One of the principal reasons for selecting the LIFO cost flow assumption instead...
Chapters 5 &6 One of the principal reasons for selecting the LIFO cost flow assumption instead of the FiFO cost how assuimption in en inflationary economic e O income taxes will be lower. O net income will be higher O a higher selling price can be established O balance sheet inventory volues will be higher
Required information Exercise 5-4A (Algo) Effect of inventory cost flow (FIFO, LIFO, and weighted average) on...
Required information Exercise 5-4A (Algo) Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-1 [The following information applies to the questions displayed below.) The following information pertains to Mason Company for Year 2: Beginning inventory Units purchased 112 units @ $ 28 350 units @ $ 42 Ending inventory consisted of 40 units. Mason sold 422 units at $84 each. All purchases and sales were made with cash. Operating expenses amounted to $3,300. Exercise...
E8.18 (LO3,5) (FIFO, LIFO, and Average-Cost Determination) Keyser Company's record of transactions for the month of...
E8.18 (LO3,5) (FIFO, LIFO, and Average-Cost Determination) Keyser Company's record of transactions for the month of April is as follows. Purchases Sales April 1 (balance on hand) 600 @ $6.00 April 3 500 @ $10.00 4 1,500 @ 6.08 9 1,300 @ 10.00 8 800 @ 6.40 11 600 @ 11.00 13 1,200 @ 6.50 23 1,200 @ 11.00 21 700 @ 6.60 27 900 @ 12.00 29 500 @ 6.79 4,500 5,300 Instructions a. Assuming that periodic inventory records...
flow methods : FIFO, LIFO, Average Cost CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 6-7...
flow methods : FIFO, LIFO, Average Cost
CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 6-7 Lisa Company had 256 units in beginning inventory at a total cost of $26,112. The company purchased 512 units at a total cost of $66,560. At the end of the year, Lisa had 205 units in ending inventory. (a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers...
Which of the following inventory cost flow assumptions produces the same ending inventory values under both...
Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems? FIFO OLIFO weighted average dollar-value LIFO
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost...
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $300,000 more than under FIFO, and its average assets would have been $300,000 less than under FIFO. Required: a. Calculate the...
Mini-Exercise Cost flow assumptions-FIFO and LIFO using a periodic system Sales durin 5.5 the year were...
Mini-Exercise Cost flow assumptions-FIFO and LIFO using a periodic system Sales durin 5.5 the year were 700 units. Beginning inventory was 400 units at a cost of $10 per LO 7,8 Purchase I was 500 units at $12 per unit. Purchase 2 was 300 units at $14 per unit Required: Calculate cost of goods sold and ending inventory under the following cost flow assumptions using a periodic inventory system): a. FIFO b. LIFO a ldspil
Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-6 (The following information applies to the questions displayed below.] The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 90 units 310 units @ @ $40 $45 Ending inventory consisted of 30 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4100. a. Compute the gross margin for Mason...
Required information Exercise 5-19 Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-6 (The following information applies to the questions displayed below.] The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 140 units 290 units @ @ $40 $45 Ending inventory consisted of 60 units. Mason sold 370 units at $90 each. All purchases and sales were made with cash. Operating expenses amounted to $4100. Exercise 5-19 Part a Required...
Required information Exercise 5-4A Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 51 (The following information applies to the questions displayed below! The following information pertains to Mason Company for Year 2 Beginning inventory Units purchased 16 units $53 $126 eachi All purchases and sales were made with cash Ending inventory consisted of 54 units Mason solo 292 Operating expenses amounted to $3825 Required Compute the gross margin for Mason Company using the following...
Chapters 5 &6 One of the principal reasons for selecting the LIFO cost flow assumption instead of the FiFO cost how assuimption in en inflationary economic e O income taxes will be lower. O net income will be higher O a higher selling price can be established O balance sheet inventory volues will be higher
Required information Exercise 5-4A (Algo) Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-1 [The following information applies to the questions displayed below.) The following information pertains to Mason Company for Year 2: Beginning inventory Units purchased 112 units @ $ 28 350 units @ $ 42 Ending inventory consisted of 40 units. Mason sold 422 units at $84 each. All purchases and sales were made with cash. Operating expenses amounted to $3,300. Exercise...
flow methods : FIFO, LIFO, Average Cost
CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 6-7 Lisa Company had 256 units in beginning inventory at a total cost of $26,112. The company purchased 512 units at a total cost of $66,560. At the end of the year, Lisa had 205 units in ending inventory. (a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers...
Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems? FIFO OLIFO weighted average dollar-value LIFO
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $300,000 more than under FIFO, and its average assets would have been $300,000 less than under FIFO. Required: a. Calculate the...
Mini-Exercise Cost flow assumptions-FIFO and LIFO using a periodic system Sales durin 5.5 the year were 700 units. Beginning inventory was 400 units at a cost of $10 per LO 7,8 Purchase I was 500 units at $12 per unit. Purchase 2 was 300 units at $14 per unit Required: Calculate cost of goods sold and ending inventory under the following cost flow assumptions using a periodic inventory system): a. FIFO b. LIFO a ldspil
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