Chapter 6, Problem 13Q

To determine

In First-in-First-Out method, the cost of initial purchased items is sold first. The value of the ending inventory consists the recent purchased items. FIFO method will provide the higher gross profit. As this method shows the initial price of the goods acquired, the cost of goods sold will be less for the inventory purchased first, thereby increasing the gross profit.

To Describe: The adverse effects of the policy followed by Corporation M.