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Vilka [71]
3 years ago
15

Assuming constant inventory quantities, which of the following inventory-costing methods will produce a lower inventory turnover

ratio in an inflationary economy?A.FIFO (first in, first out).B.LIFO (last in, first out).C.Moving average.D.Weighted average.
Business
1 answer:
Mandarinka [93]3 years ago
5 0

Answer:

A) FIFO (first in, first out)

Explanation:

When an economy is said to be inflationary, it means that the general level or prices in the economy is rising quickly.

When the inflation rate is high, a company should not use the FIFO method, since it will overstate its profit and understate its COGS. They might even end up selling below cost without noticing it.

For example, if the company bought 100 units at $10 per unit during January, and it plans to sell them with a 20% markup. But since the inflation rte is very high, for instance 15%, the next time the company buys the same units the price will have increased a lot. If they bought 50 units during July, they will probably pay around $11 per unit. When the company sells the units at $12, instead of making a 20% gross profit, they will be making a gross profit of only around 10-13%. Imagine if the inflation rate was 50% instead of 15%, the situation would be much worse.

When the inflation rate is high, you should always use the LIFO method. When companies use the FIFO method in a high inflationary economy, they will not be willing to sell many units, since their profit is reduced or even negative, this will end up lowering their inventory turnover.

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Answer:

b. = 31,740,000

Explanation:

69,000,000 - 46% = 37260000

69,000,000 - 37260000 = 31,740,000

8 0
2 years ago
Calvin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs. What
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Answer:

The answer is "managerial accountant".

Explanation:

The economic circumstances collect and earned value collection of data, evaluating and presenting financial information for the organization or the management team of the company. These statistics will then be used to make sensible financial decisions that really can benefit the overall growth of the organization.

Managers were employing company and organizational accounts to monitor internal financial processes, revenue, spending, and budget, submit reports, determine past trends and forecast future needs, and aid economic decisions.

5 0
3 years ago
Which of the following would not be reported as current liabilities on the balance sheet?
olga55 [171]
D. Accounts receivable
6 0
2 years ago
Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 30,000 units. Company poli
densk [106]

Answer:

Merchandise purchases budget explanations only.

Explanation:

Hi, your question has missing information, however i have supplied explanations below.

A purchases budget is required to determine the quantities of purchases required for :

  1. Resale - For Merchandisers
  2. Use in Production in case of Manufacturer

Here is the structure of the merchandise purchases budget for Walker Company (Merchandiser).

<u>Merchandise purchases budget </u>

                                                                       Month

Budgeted Sales                                                  x

Add Budgeted Inventory                                   x

Total Purchases needed                                    x

Less Budgeted Opening Inventory                  (x)

Budgeted Purchases                                          x

As stated by the question : <em>Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month.</em>

<em>Ending Inventory = Next months` sales x required percentage</em>

Ending Inventory for one month say July becomes Opening Inventory for the following month (August) for our merchandise purchases budget.

5 0
2 years ago
The real wages of workers will tend to be high when
DIA [1.3K]

Answer:

When labor productivity is high.

Explanation:

According to neoclassical economic theory, real wages are equal to the marginal product of labor (MLP). The marginal product of labor is the extra output produced by one extra unit of labor (one extra worker).

If the MPL is high, this means that workers are very productive, and therefore, are paid a high real wage accordingly.

This is why countries with high labor productivity like the U.S. or Switzerland also have very high real wages.

6 0
3 years ago
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