Information on the price elasticity of demand is particularly important to managerial decision making because: ___________
a. the higher the price elasticity of demand for a product is, the more profitable it will be to produce more of it.
b. as the price elasticity coefficient approaches one, profits will increase.
c. it allows one to predict how total revenue will respond as a result of a change in price.
d. depending on the elasticity coefficient, decision makers will immediately know if a price change will cause profits to increase or decrease
Answers
Answer:
c. it allows one to predict how total revenue will respond as a result of a change in price.
Explanation:
Information on the price elasticity of demand is particularly important to managerial decision-making because it allows one to predict how total revenue will respond as a result of a change in price. Thus, option (c) is correct.
What is the price?The term pricing refers to the product value are the owner are the sale of the product. The price of the product are the amount to the borrower are the paid. Pricing is the important factor in determining how well-liked a product is in the market. The cost are the those price to the manufacturing the product. The price are the retailer sale, the cost, and the price are the different.
With elastic demand, raising the price reduces total revenue. With inelastic demand, therefore, raising the price will boost total income. The price elasticity of demand information is very relevant for managerial decision-making. The price change accounted for the whole revenue.
As a result, the information on the price elasticity of demand is particularly important to managerial decision-making because it allows one to predict how total revenue will respond as a result of a change in price. Therefore, option (c) is correct.
Learn more about on price, here:
https://brainly.com/question/19091385
#SPJ2
Related Questions
One instance of a political or legal trend is the maturing of the "Millennials" cohort in
the United States.
True
False
Answers
True. The maturing of the "Millennials" cohort in the United States is an instance of a demographic trend, which can have political and legal implications as this generation becomes a larger portion of the population and gains more influence in society.
What are MillennialsMillennials are a generation of people born between the early 1980s and the mid-1990s or early 2000s, depending on the source. They are also sometimes referred to as Generation Y. Millennials are known for growing up during a time of rapid technological advancement, globalization, and social change.
They are the first generation to have grown up with easy access to the internet, social media, and smartphones, which has shaped their attitudes, behaviors, and worldview.
The values, beliefs, and priorities of the Millennial generation are likely to shape the political and legal landscape in the years to come.
Learn more about Millennials at
https://brainly.com/question/30419998
#SPJ1
Luca, the operations manager a company that produces ground coffee beans, wants to know the sequence of the production process in the company to determine if any process can be combined or eliminated. In this case, a _____ will suit Luca's requirement.
Answers
The use of Flow-chart will suit Luca's requirement to know the sequence of the production process.
Flowchart is a diagram that shows the separate steps of a process in sequential order.
This will help Luca to know the sequence of the production process and allow him to decide whether to combine or eliminate some process.Therefore, the use of Flow-chart will suit Luca's requirement to know the sequence of the production process.
Read more about Flowchart:
brainly.com/question/11306180
WHich of the following is not a type of skill needed by effective leaders?
Answers
Answer:
WHich of the following is not a type of skill needed by effective leaders?
Answer. power hankering skil
Accumulated earnings from a firm's profitable operations that are kept in the business and not paid out to stockholders are called ?
Answers
Answer:
I believe it's retained earnings
Amber’s starting salary for her new job will be $35,500 a year. How much will she pay to the Social Security system for her first year assuming total FICA withholdings of 7.65%?
Answers
Answer:
I dont know the answer but I want whatever job she has
Which of the following is one result of stringent 21st century accounting
regulations?
Answers
A result of the stringent 21 st century accounting regulations enacted was B. they make accounting more complex.
Why did accounting regulations become more stringent ?Over time, accounting standards have become more stringent, and agencies and professional associations make sure that these regulatory rules serve the public's and businesses' best interests. These agencies assist businesses in comprehending the domestic and international legal requirements they must meet.
An organization is in regulatory compliance when it strictly complies with all applicable local, national, and international laws. Businesses may be subject to financial, fiscal, environmental, or business and tax code laws depending on their size and industry. However, why do financial services rank first among the industries most adversely affected by these regulatory laws?
As a result, accounting regulations have made accounting much more complex in order to ensure that companies abide by accounting best practices.
Find out more on accounting regulations at https://brainly.com/question/28334617
#SPJ1
Options for this question are:
they make accounting simplerthey make accounting more complexthey unify international tax codesthey address the needs of small businessesIdentity three areas in our daily lives that would benefit from the study of communication Use specific examples from the site.
Answers
Answer:
school
private
University
QUESTION 11
Whether targeting consumers or resellers, marketers need to focus on:
O Buying center synergy.
O Corporate profit sharing
O Reducing derived demand
O Creating value for their customers
Answers
Marketers need to focus on creating value for their customers. The Option D.
Why is creating value for customers crucial for marketers?Creating value for customers is crucial for marketers as it directly impacts customer satisfaction and loyalty. When marketers prioritize creating value, they focus on understanding customer needs and preferences, developing products or services that meet those needs and delivering exceptional customer experiences.
By doing so, they differentiate themselves from competitors, build strong customer relationships and drive business growth. When customers perceive value in what a company offers, they are more likely to make repeat purchases.
Read more about marketers
brainly.com/question/25369230
#SPJ1
If your manager were to give you a complex project that involved a lot of research and analysis to provide information to write a detailed and accurate report, how might you make it more manageable? What type of communication skills would that require? Please write at least 5 sentences.
Answers
A large project report can be easier to manage if the key components are first outlined as a thesis statement and the duties are divided into manageable chunks.
A report is what?A report is a written statement or document that outlines the major problems or happenings inside an organization and aids in understanding the internal and external forces at play.
It's crucial to have written communication abilities that enable someone with a strong vocabulary to precisely communicate the notion to the reader in order for a report to be effective and correct.
It is necessary to create an outline plan for the task that needs to be done since it aids in framing the report aspects when a project report requires extensive research and analysis to deliver information.
To Know more about project report
https://brainly.com/question/15521500
#SPJ1
In Year 1, the investor acquired 10% ownership of investee and applied fair value method to account for the investment. In Year 2, the investor acquired another 30% ownership and applied equity method to account for the investment (40% ownership). In Year 3, the investor sold 35% ownership of the investee and started using fair value method again to account for the investment (5% ownership). Should the investor apply retrospective adjustment in Year 2 and Year 3
Answers
Answer:
b
Explanation:
1. As a Cost and Management Consultant in the banking industry in Ghana, one of your highly
esteemed clients, a top tier banking institution in Ghana has required of you to advise them as to
whether target costing can be applied to the banking industry in Ghana. They further require you
to advise them on what products or services can target costing be applied.
2. 1
What forces have caused cost and management accounting systems designed decades ago to
become less relevant and less valuable for organizational employees in today’s globally
competitive environment?
Answers
Answer and Explanation:
The explanation is shown below:-
1. Goal costing is a form of administration with the main emphasis on reducing costs to a set value. Upon targeting the administration front pick the desired value of trading and benefit perimeter, then evaluate the price to achieve this desired cost of trading and benefit perimeter. This then handles all the tasks needed to meet these planned costs. The key aim of goal costing is the company match, the selling price is the consumer price always, and the profit is reduced by the way out.
Target costing for all units can be applied. And to the banking sector in Ghana as a whole, it can be applied. Target costing may be used in the banking division to reduce the expense of service delivery. The full use of bank sources such as deposits, ATMs, money tellers, etc. can be made here.
To most important services such as credit cards, savings, ATM facilities, Internet banking, etc, goal costing can be enforced. The bank must be able to sell the aforementioned services at the same price in the sector and should discover methods to reduce the value to a target price using normal costs. Internet banking gateways, for example, can be outsourced on a central level to minimize costs, ATMs can be further established via ties between previously operated banks.
2. 1 Established decades earlier, the cost and management accounting systems are known as conventional cost control.
Modern cost control has many drawbacks as a result of which companies have to switch to the new cost and accounting control system known as strategic cost management
Some of the factors that make the management of conventional costs less important and less efficient in today's globally competitive environment are as follows:
a. Concentrate on short term targets.
b. Cost management & quality containment is the primary goal.
c. A reactive approach to commodity cost analysis.
d. Although reducing costs, the results could eventually result in fewer goods being delivered.
e. The nature of today's market is too easy to manage.
f. This will not adequately distribute indirect costs which are the main costs in the scene today.
Which one of the following departments provides information to the underwriting department to assist in selecting and rating risks?
Select one:
A. Actuarial
B. Claims
C. Marketing
D. Risk control
Answers
D. To assist in choosing and grading risks, the risk control department offers information to the underwriting department.
How does a risk department operate?Identifying, evaluating, and managing risk involves considering potential losses to assets, liabilities, income, and employees. The protection of the organization's material and human resources is the ultimate goal of risk management to ensure the smooth continuation of business operations.
What justifies the importance of a risk management department?In order for a corporation to effectively identify and manage potential risks, risk management is a crucial process that equips it with the essential tools. The process of mitigating a risk is simple once it has been identified.
To know more about Risk Control visit:
https://brainly.com/question/29353876
#SPJ4
Cullumber Company issues $315,000, 20-year, 6% bonds at 102. Prepare the journal entry to record the sale of these bom
2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Answers
The journal entry to record the sale of the bonds would be:
Debit Cash $321,300
Credit Bonds Payable $315,000
Credit Premium on Bonds Payable $6,300
What is the journal entry?The selling of the bonds generated $321,300 in cash for the corporation [$315,000 x 102%]. The $315,000 face amount of the bonds is credited to the Bonds Payable account.
The Premium on Bonds Payable account is credited with the $6,300 difference between the face value and the total cash received since the bonds were sold at a premium.
So, the entry is:
Debit Cash $321,300
[$315,000 x 102%]
Credit Bonds Payable $315,000
Credit Premium on Bonds Payable $6,300
Learn more about journal entry here:https://brainly.com/question/28390337
#SPJ1
Communication response time must be faster than in the past to succeed in the modern workplace.
True
False
Answers
Answer:
TRUE
Explanation:
Answer:
true!
Explanation:
because it is
Alistair owns and runs a bakery. He buys groceries worth $250 for his business. What entries does he make in the book of accounts?
Alistair makes two entries in the book of accounts. He debits the supplies account and
compliance with the
principle of transaction
Reset
Next
Answers
Alistair is the owner and operator of a bakery. He spends $250 on groceries for his business. He makes two bookkeeping entries in the book of accounts. He debits the supplies account and follows the transaction principle.
A book of accounts contains commercial account transaction records. Commercial double entry accounting systems include numerous ledgers or books, such as the general ledger as well as general journal. These ledgers are collectively referred to as books, a shortened term for books of account. Any of the numerous books utilised in the accounting process can be referred to as a single book of accounts.
Thus the entries that he make in the book of accounts is that he makes two entries in the book of accounts. He debits the supplies account and compliance with the principle of transaction.
Learn more about accounts, here:
https://brainly.com/question/28391686
#SPJ1
908 25. द्वितीय लेखाविधि तथा विश्लेषण Nuwakot Consultancy was organized on June 2, 2019, by a group of accountants to provide accounting and tax services to small businesses in Kathmandu. The following transactions occurred during the first month of business. June 2 June 5 June 8 June 15 June 17 June 23 June 28 June 29 Received contributions of Rs. 10,000 from each of the three owners of the business is exchange for shares of stock. Purchased a computer system for Rs. 12,000. The agreement with the vendor requires a down payment of Rs. 2,500 with the balance in 60 days. Signed a two-year promissory note at the bank and received cash of Rs. 20,000. Billed Rs. 12,350 to clients for the first-half of June. Paid a Rs. 900 bill from the local newspaper for advertising for the month of June. Received the amounts billed to clients for services performed during the first half of the month. Received and paid gas, electric, and water bills. The amount is Rs. 2,700. Received the landlord's bill for Rs. 2,200 for rent on the office space that Nano Consultancy leases. The bill is payable by the 10th of the following month. Paid salaries and wages for June. The total amount is Rs. 5,670. Billed Rs. 18,400 to clients for the second half. Declared and paid dividends in the amount of Rs. 6,000. June 30 June 30 June 30 Required: (a) Journal entries on the books of Nuwakot Consultancy. (For the transactions entered into during the month. Ignore depreciation and interest expenses). (b) Post the transactions into T-accounts. (c) A trial balance at June 30, 2019.
Answers
1. The Journal Entries on the books of Nuwakot Consultancy for the June Transactions are as follows:
Journal Entries:Date Transactions Debit Credit
June 2 Cash Rs. 30,000
Common Stock Rs. 30,000
June 5 Computer Rs. 12,000
Cash Rs. 2,500
Accounts Payable Rs. 9,500
June 8 Cash Rs. 20,000
Notes Payable Rs. 20,000
June 15 Accounts Receivable Rs. 12,350
Service Revenue Rs. 12,350
June 17 Advertising Expense Rs. 900
Cash Rs. 900
June 23 Cash Rs. 12,350
Accounts Receivable Rs. 12,350
June 28 Utility Expense Rs. 2,700
Cash Rs. 2,700
June 29 Rent Expense Rs. 2,200
Rent Payable Rs. 2,200
June 30 Salaries &
Wages Expense Rs. 5,670
Cash Rs. 5,670
June 30 Accounts Receivable Rs. 18,400
Service Revenue Rs. 18,400
June 30 Dividends Rs. 6,000
Cash Rs. 6,000
2. The Posting of the transactions into T-accounts is as follows:
Cash AccountDate Transactions Debit Credit
June 2 Common Stock Rs. 30,000
June 5 Computer Rs. 2,500
June 8 Notes Payable Rs. 20,000
June 17 Advertising Expense Rs. 900
June 23 Accounts Receivable Rs. 12,350
June 28 Utility Expense Rs. 2,700
June 30 Salaries and Wages Expense Rs. 5,670
June 30 Dividends Rs. 6,000
June 30 Balance Rs. 44,580
Rs. 62,350 Rs. 62,350
Common StockDate Transactions Debit Credit
June 2 Cash Rs. 30,000
ComputerDate Transactions Debit Credit
June 5 Cash Rs. 2,500
June 5 Accounts Payable Rs. 9,500
June 30 Balance Rs. 12,000
Accounts PayableDate Transactions Debit Credit
June 5 Computer Rs. 9,500
Notes PayableDate Transactions Debit Credit
June 8 Cash Rs. 20,000
Rent PayableDate Transactions Debit Credit
June 29 Rent Expense Rs. 2,200
Accounts ReceivableDate Transactions Debit Credit
June 15 Service Revenue Rs. 12,350
June 23 Cash Rs. 12,350
June 30 Service Revenue Rs. 18,400
Service RevenueDate Transactions Debit Credit
June 15 Accounts Receivable Rs. 12,350
June 30 Accounts Receivable Rs. 18,400
June 30 Balance Rs. 30,750
Advertising ExpenseDate Transactions Debit Credit
June 17 Cash Rs. 900
Utility ExpenseDate Transactions Debit Credit
June 28 Cash Rs. 2,700
Rent ExpenseDate Transactions Debit Credit
June 29 Rent Payable Rs. 2,200
Salaries and Wages ExpenseDate Transactions Debit Credit
June 30 Cash Rs. 5,670
DividendsDate Transactions Debit Credit
June 30 Cash Rs. 6,000
3. The preparation of the trial balance at June 30, 2019, is as follows:
Date Transactions Debit Credit
Cash Rs. 44,580
Common Stock Rs. 30,000
Computer Rs. 12,000
Accounts Payable Rs. 9,500
Notes Payable Rs. 20,000
Rent Payable Rs. 2,200
Accounts Receivable Rs. 18,400
Service Revenue Rs. 30,750
Advertising Expense Rs. 900
Utility Expense Rs. 2,700
Rent Expense Rs. 2,200
Salaries and Wages Expense Rs. 5,670
Dividends Rs. 6,000
Totals Rs. 92,450 Rs. 92,450
What are the journal entries?Journal entries are made to record the transactions of a business as they occur daily.
Journal entries help post transactions to the general ledger (T-accounts).
With a trial balance, the balances in the general ledger are summarized to prepare financial statements.
Transaction Analysis:June 2 Cash Rs. 30,000 Common Stock Rs. 30,000
June 5 Computer Rs. 12,000 Cash Rs. 2,500 Accounts Payable Rs. 9,500
June 8 Cash Rs. 20,000 Notes Payable Rs. 20,000
June 15 Accounts Receivable Rs. 12,350 Service Revenue Rs. 12,350
June 17 Advertising Expense Rs. 900 Cash Rs. 900
June 23 Cash Rs. 12,350 Accounts Receivable Rs. 12,350
June 28 Utilities Expense Rs. 2,700 Cash Rs. 2,700
June 29 Rent Expense Rs. 2,200 Rent Payable Rs. 2,200
June 30 Salaries and Wages Expense Rs. 5,670 Cash Rs. 5,670
June 30 Accounts Receivable Rs. 18,400 Service Revenue Rs. 18,400
June 30 Dividends Rs. 6,000 Cash Rs. 6,000
Learn more about journal entries at https://brainly.com/question/28390337
#SPJ1
what is a marketing plan ?? answer please .
Answers
Answer:
marketing plan is defined as a comprehensive document or blueprint that outlines the advertising and marketing efforts for the coming year. It describes business activities involved in accomplishing specific marketing objectives within a set time frame. A marketing plan also includes a description of the current marketing position of a business, a discussion of the target market and a description of the marketing mix that a business will use to achieve their marketing goals.
Ever since Damien interned at an accounting firm the summer after his freshman year of college, he’s wanted to become a CPA working at a large firm. Now, several years later after graduating from college, passing the CPA exam, and working at medium-sized firm, he’s been offered a job at a large national firm with the potential to become a partner in five years. Which of the five needs has Damien attained?
Answers
The need from Maslow's Hierarchy of Needs that has been accomplished is the esteem needs.
Maslow's Hierarchy of Needs simply refers to the theory of motivation that implies that there are certain needs that affect the behavior of a person.
Maslow's Hierarchy of Needs include:
Physiological needsSafety needsLove and belonging needsEsteem needsSelf-actualization needsBased on the information given, Damien has attained the esteem needs. This includes self-worth, respect, recognition, and reputation. Since Damien is wanted to become a CPA working at a large firm, he's in the fourth stage which is esteem needs.
Read related link on:
https://brainly.com/question/24988735
Which time-management tool helps you analyze which tasks are most important and whether to "do", "defer", "delegate", or "delete"?
Online calendar
Time management matrix
Learning management system Daily planner
Answers
The time-management tool helps you analyze which tasks are most important and whether to "do", "defer", "delegate", or "delete" is: Time management matrix.
What is time management matrix?Time management matrix can be defined as a matrix they enables people to effectively manage their time and this matrix help to prioritize tasks from the most important tasks to the least important tasks.
Time management matrix is important for those people that want to learn how to manage their time so as to complete their tasks within a stipulated period of time.
Therefore the time-management tool helps you analyze which tasks are most important and whether to "do", "defer", "delegate", or "delete" is: Time management matrix.
Learn more about Time management matrix here:https://brainly.com/question/24662469
#SPJ1
Suppose Sally Smith plans to invest $1,000. She can earn an effective annual rate of 5% on Security A, while Security B has an effective annual rate of 12%. After 11 years, the compounded value of Security B should be more than twice the compounded value of Security A. (Ignore risk, and assume that compounding occurs annually.) (2.5pts) Question 39 - Suppose Sally Smith plans to invest $1,000. She can earn an effective annual rate of 5% on Security A, while Security B has an effective annual rate of 12%. After 11 years, the compounded value of Security B should be more than twice the compounded value of Security A. (Ignore risk, and assume that compounding occurs annually.) True False
Answers
Answer:
True
Explanation:
Which of the following statements holds true for the term, internship?
Select one:

a.
It refers to the measure of how long an employee has been laboring in an organization.b.
It refers to the salary range a company sets for its employees, independent of the community wage level and wages as set by other, competing companies.c.
It refers to a structure for determining salary increases that encourages work that is less effective, less efficient, or both.d.
It refers to a low-paying post workers accept to gain valuable experience.

e.
It refers to the standard range of wages paid at a location, usually across a city or a region.
Answers
The statement that holds true for the term "internship" is d. It refers to a low-paying post workers accept to gain valuable experience.
Why does it hold true for the term?An internship is a type of job training for entry-level positions where a worker, often a student or recent graduate, gains experience in a particular field or industry.
Internships are usually short-term and may be unpaid or low-paying, but they offer valuable experience, networking opportunities, and the chance to learn and develop new skills.
Therefore, option d, "It refers to a low-paying post workers accept to gain valuable experience," is the statement that accurately describes the term "internship."
learn more about internship: https://brainly.com/question/28848189
#SPJ1
goals
security
liquidity
interest
emergencies
save
The future value of today’s savings is measured by the______
_ earned on what was saved.
Answers
Answer:
interest
Explanation:
The correct option is - interest
Reason -
Future value is the value of an asset at a specific date.
It measures the nominal future sum of money that a given sum of money is "worth" at a specified time in the future assuming a certain interest rate, or more generally, rate of return.
list and identify donors restrictions about net asset and change in net asset.
Answers
Net assets with donor restrictions – The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions.
How do you define an asset?An asset is something with monetary worth and/or potential reward. A machine, a financial instrument, or a patent are examples of assets that frequently provide cash flows in the future. Personal property can include a home, car, investments, works of art, or household items.
What kind of asset is that?Intangible assets like patents, royalties, and other intellectual property are included in the category of assets together with tangible items like machinery, real estate, raw materials, and inventory.
To know more about Asset visit:
https://brainly.com/question/14404094
#SPJ1
how does religion and beliefs affects business
Answers
Powers Company reported net sales of $1,320,000, average Accounts Receivable, net of $66,500, and net income of $56,125. The accounts receivable turnover ratio is
Answers
Answer:
19.85 times
Explanation:
The accounts receivable turnover ratio is Net sales / Average accounts receivables
Given that net sales = $1,320,000
Average accounts receivables = $66,500
Accounts receivable turnover ratio = $1,320,000 / $66,500
= 19.85 times
He's a cat in boots and he don't wear socks but he does his little business in a litter box yes his little business in a litterrrr boxxxxx his business that I will not dicuss (might not know where this is from )
Answers
Answer:
what the heck is this?? lol
Explanation:
annuity repayment vs level principal repayment. can you compare these payments methods
Answers
Answer: See explanation
Explanation:
Annuities are referred to as the loans that one would have to pay back over a period of time with a particular interest rate. It should be noted that annuities have consistent payments for the period that the loan will be paid back. An example of annuity is the car loan or the mortgage.
For a level principal loan, it should be noted that the principal payment will remain constant and won't change while there'll be a reduction in the interest rate over the period that the loan will be paid back. This means that there will be w reduction in the payments as the time progresses.
Saudi Arabia has no law to protect personal data privacy.
True
D
False
Answers
Answer:
False
Explanation:
Although there is currently no specific data protection legislation in place in KSA, personal data and privacy are somewhat protected in other sectoral laws, particularly in the context of technology and electronic communications.
Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $420,000 on sales of $1,500,000. The company’s average operating assets for the year were $1,700,000 and its minimum required rate of return was 15%.
Required:
Compute the company’s residual income for the year.
Answers
Answer: 165,000
Explanation:
To compute the company’s residual income for the year, we can use the formula:
Residual Income = Net Operating Income – (Minimum Required Rate of Return x Average Operating Assets)
Given: Net Operating Income = $420,000 sales = $1,500,000
Average Operating Assets = $1,700,000
Minimum Required Rate of Return = 15% = 0.15
Residual Income = Net Operating Income – (Minimum Required Rate of Return x Average Operating Assets)
Residual Income = $420,000 – (0.15 x $1,700,000)
Residual Income = $420,000 – $255,000
Residual Income = $165,000
Therefore, the company’s residual income for the year was $165,000.
di dolly. How should me change of mentory valuation basis be accounted for? (5 marks) QUESTION THREE (10 marks) Villandry's inventory includes three items for which the following details are available. Supplier's list pass Shs. w ka Net realisable value Shs. 5,100 2,800 4,100 Product A Product B Product C 3,600 4,200 The company receives a 24% trade discount from its suppliers and it also takes advantage of a 2% discount for prompt payment. Required: (a) Calculate the total value of products A, B and C which should be shown in inventory in the statement of financial position. (b) Explain the difference that changing from a weighted average to FIFO method of inventory valuation is likely to have entity's profit or loss. (10 marks) O
Answers
Answer:
Villandry
Inventory Valuation:
a) The total value of products A, B, and C shown in inventory in the statement of financial position is:
$8,844
b) Difference and Effect of Weighted Average and FIFO Methods on Profit or Loss:
Villandry's FIFO method of valuing the cost of goods sold and ending inventory is based on the assumption that goods that are purchased first will be the first to be sold. With this assumption, the ending inventory always reflects the newest prices, while the cost of goods sold reflects the older prices. On the other hand, the weighted average method calculates the cost of goods sold and the ending inventory based on an average price. It divides the cost of goods available for sale by the quantity of goods available for sale. The average value obtained is then applied to compute the cost of goods sold and the ending inventory. What the weighted average method achieves is to even out the unit cost of inventory.
Therefore, they do not produce the same result. When prices are rising, as the FIFO method reflects more accurately the values of the cost of goods sold and ending inventory than the weighted average, it will also report higher profits or lower losses than the weighted average. The weighted average does not show such fluctuations.
Explanation:
a) Data and Calculations:
Net realisable List price value Purchase cost Inventory Value
Shs. Shs. Shs (list price -24%) Shs
Product A 3,600 5,100 3,876 3,600
Product B 2,900 2,800 2,128 2128
Product C 4,200 4,100 3,116 3,116
Total cost 10,700 12,000 9,120 8,844
b) The purchase costs are computed by deducting 24% trade discount from the suppliers' list prices. For example, for the total list price, taking away 24% trade discount will reduce the cost to $9,120 ($12,000 * 0.76). This purchase cost is then compared with the net realizable value to determine the inventory value for each product.