Echo Sound Company Just Began Business and Made the Following

question 82

Multiple Choice

Echo Sound Company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.The inventory method which results in the highest gross profit for June is

• A)the FIFO method.
• B)the LIFO method.
• C)the average cost method.
• D)not determinable.

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Definitions:

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred.

Manufacturing Company

A manufacturing company is an enterprise that uses raw materials, parts, and components to assemble finished goods on a large scale.

President's Salary

indicates the fixed annual compensation paid to the company's highest-ranking officer.

Period Cost

Costs that are expensed in the period in which they are incurred, typically not directly tied to production activities, such as administrative expenses.