Which Statement Relating to the Moving Average Method of Costing

question 13

Multiple Choice

Which statement relating to the moving average method of costing inventories, used with the perpetual inventory system, is incorrect?

• A) A new average cost is calculated after each sale.
• B) A new average cost is calculated after each purchase return.
• C) In periods of rising prices the profit result is between that of the FIFO and LIFO methods.
• D) The formula for average cost is cost of goods available for sale divided by units for sale.

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