Use This Inventory Information for the Month of August to Answer

question 58

Multiple Choice

Use this inventory information for the month of August to answer the following question. Assuming that a perpetual inventory system is used.
-What is ending inventory (rounded) under the average-cost method?

• A)$3,764
• B)$3,826
• C)$3,968
• D)$3,986

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Definitions:

Operating Leverage

A financial ratio that measures the degree to which a firm or project can increase operating income by increasing revenue, highlighting the impact of fixed costs on profits.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business over a certain period.

Operating Leverage

A financial ratio that measures the proportion of fixed costs to variable costs in a company's cost structure, indicating how revenue growth translates into growth in operating income.

EPS Variability

Fluctuations in a company's earnings per share over time, indicating the volatility of its profitability.