Barry Company purchased two identical inventory items. The item purchased first cost $7.00 and the item purchased second cost $9.00. Barney sold one of the items for $12.00. Which of the following statements is true?
A) Ending inventory will be lower if Barney uses weighted average than it would be if FIFO were used.
B) Cost of goods sold will be higher if Barney uses FIFO than it would be if weighted average were used.
C) Ending inventory will be the same no matter which cost flow method is used.
D) Gross margin will be higher if Barney uses LIFO than if FIFO were used.

Question

Quizplus · Accepted Answer

Ending inventory will be lower if Barney uses weighted average than it would be if FIFO were used because the weighted average cost per unit is lower than the FIFO cost per unit.

Barry Company Purchased Two Identical Inventory Items