Lee Industries Had the Following Inventory Transactions Occur During 2014

question 91

Multiple Choice

Lee Industries had the following inventory transactions occur during 2014: The company sold 204 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

• A) $9,764
• B) $9,460
• C) $3,392
• D) $3,088

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Definitions:

Gross Margin

Gross margin is a company's net sales revenue minus its cost of goods sold, representing the efficiency of a company in managing its direct costs.

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Variable Costing

A costing method that includes only variable production costs in the cost of goods sold and uses fixed manufacturing overhead as a period cost.

Absorption Costing

A financial calculation approach that encompasses both direct and indirect expenses related to producing a product.