Use the Following Information for the Month of July for Questions

question 69

Multiple Choice

Use the following information for the month of July for questions
ABC Inc.uses the FIFO cost method in a perpetual inventory system.
-If ABC Inc.used the average cost method instead of FIFO, gross profit from the July 8 sale would be

• A)higher.
• B)lower.
• C)the same.
• D)cannot be determined.

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Definitions:

Units Produced

The total quantity of finished goods a manufacturing process produces in a specific period, reflecting production levels and efficiency.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output, such as rent, salaries of supervisory staff, and equipment depreciation.

Absorption Costing

An approach in accounting that factors in every production cost, from raw materials and direct labor to both kinds of manufacturing overheads, variable and fixed, into the price of a product.

Net Operating Income

The profit generated from a company's core business operations, excluding expenses and revenues from non-operating activities.