Use the following information for the month of July for questions.
-If ABC Inc. used the average cost formula instead of FIFO, gross profit from the July 8 sale would be
A) higher.
B) lower.
C) the same.
D) cannot be determined.

Question

Use the following information for the month of July for questions. 
-If ABC Inc. used the average cost formula instead of FIFO, gross profit from the July 8 sale would be
A) higher. 
B) lower. 
C) the same. 
D) cannot be determined.

Quizplus · Accepted Answer

Using the average cost formula typically results in a lower cost of goods sold compared to FIFO when prices are rising, leading to a lower gross profit.

Use the Following Information for the Month of July for Questions