FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Evansville Company had the following transactions for the
month.
Number
Cost
of Units
per Unit
Purchase
2
$8,000
Purchase
9,000
Purchase
4
9,500
Calculate the gross margin for each of the following cost
allocation methods, assuming Evansville sold just one unit
of these goods for $12,000. Round your intermediate
calculations and final answers to the nearest dollar
amount.
Gross Margin
A. First-in, First-out (FIFO)
$4
B. Last-in, First-out (LIFO)
C. Weighted Average (AVG)
When prices are rising (inflation), which costing method
would produce the highest value for gross margin?
First-in, First-out
Last-in, First-out
Weighted Average
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