McQuire Company Uses the Periodic Inventory Method and Had the Following

question 161

Essay

McQuire Company uses the periodic inventory method and had the following inventory information available: A physical count of inventory on December 31 revealed that there were 600 units on hand.
Instructions
Answer the following independent questions and show calculations supporting your answers.
a. Assume that the company uses the FIFO cost formula. The value of the ending inventory at December 31 is $__________.
b. Assume that the company uses the average cost formula. The value of the ending inventory on December 31 is $__________.
c. Determine the difference in the amount of income that the company would have reported if it had used FIFO instead of Average. Would income have been greater or less?

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Definitions:

Efficiency

The ability to achieve maximum productivity with minimum wasted effort or expense, often assessed in processes, systems, or organizations.

Top Executives Discretion

The authority and autonomy granted to high-level managers and executives to make decisions and take actions without needing approval from others.

Financial Reserves

Assets that are saved or conserved for future use, offering a buffer against financial challenges or emergencies.

Organizational Culture

The shared values, beliefs, norms, and practices that shape the social and psychological environment of an organization.