Ask Question
24 September, 10:03

Company C is identical to Company D in every respect except that Company C uses LIFO and Company D uses average costs. In an extended period of rising inventory costs, Company C's gross profit and inventory turnover ratio, compared to Company D's, would be: Gross profit Inventory turnovera. higher higherb. higher lowerc. lower lowerd. lower higher

+2
Answers (1)
  1. 24 September, 10:47
    0
    d. lower higher

    Explanation:

    LIFO: It is an inventory valuation method that assume inventory which is placed last in the stock, it will be sold first. Therefore, it is termed as last in, first out.

    Average cost method: It is also know as weighted average method, which calculate the cost of total goods produced by dividing total cost of goods available for sales with total number of item produced.

    As company C have used LIFO method instead of Average cost method, therefore company have managed to higher inventory turnover, however lower gross profit as compared to company D.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Company C is identical to Company D in every respect except that Company C uses LIFO and Company D uses average costs. In an extended ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers