Reference no: EM132617341

Financial analysis' Consider the following scenario: You run a simple merchandising business and make a small order of a new product for the first time. Half of your goods sell quickly, so make a second larger order at the same price per unit Before the second order runs out, you place a third order (same size as the second order) but the price has now increased. When the month ends, the second order has been fully sold but the third order is still completely intact.

Problem 1: Under which method, first-in-first-out or moving-weighted-average, would the cost of good sold expense be highest for this product? Under which method would the product's gross margin be higher? Under which method would the ending inventory be higher? Explain your answer in detail.