Two Companies Report the Same Cost of Goods Available for Sale

question 65

Multiple Choice

Two companies report the same cost of goods available for sale but each employs a different inventory cost formula. If the price of goods has increased during the period, then the company using

• A) FIFO will report lower ending inventory.
• B) average cost will report lower ending inventory.
• C) FIFO will report higher cost of goods sold.
• D) average cost will report lower cost of goods sold.

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Definitions:

Brand Dilution

Occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.

Pepsi

A global brand of carbonated soft drinks produced and manufactured by PepsiCo.

Product Label

A piece of information on a product's package that provides details about the product, including ingredients, manufacturer, usage instructions, and safety warnings.

Business Perspective

A viewpoint or attitude towards the operations, strategies, and goals of a business or organization.