Blink Company,which Uses the FIFO Inventory Method,had 508,000 Units in Inventory

question 39

Essay

Blink Company,which uses the FIFO inventory method,had 508,000 units in inventory at the beginning of the year at a FIFO cost per unit of $20.No purchases were made during the year.Quarterly sales information and end-of-quarter replacement cost figures follow:
The market decline in the first quarter was expected to be nontemporary.Declines in other quarters were expected to be permanent.
Required:
Determine cost of goods sold for the four quarters and verify the amounts by computing cost of goods sold using the lower-of-cost-or-market method applied on an annual basis.

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Definitions:

Short Run

A period in which the quantity of at least one input is fixed and the quantities of the other inputs can be varied.

Product Differentiation

A marketing strategy that businesses use to distinguish their products from those of competitors through design, features, and branding.

Market Power

The ability of a firm or group of firms to control or manipulate prices in the market by controlling supply, demand, or both.

Monopolistically Competitive

A market structure in which many companies sell products that are similar but not identical, allowing for some degree of market power.