C calculate cost of sales and ending inventory using different inventory valuation methods and explain the effect of the inventory valuation method choice on gross profit;

Question 1

Specific Identification Manipulation

Answer 1

Using specific I.D. for interchangeable items - an earnings manipulation, through the shipment decision (shipping specific ID goods as interchangeable)

Question 2

WAC/Unit=

Answer 2

COGAS/Units Available

Question 3

Ev. CFassumption has…

Answer 3

…sales, cost of sales, Ending Inventory, Gross Profit

All first year prices are the same, because prices have yet to change under any cost assumption

When prices decline through time, LIFO will report the highest EI of the 4, also the lowest cost of sales (as a high EI indicates that not much has been sold), and the highest GP

FIFO in a price decline - Lowest ending inventory amount, highest cost of sales, lowest gross profit