The gross margin method is frequently used for all of the following except to:
A) Estimate replacement cost of ending inventory lost or damaged.
B) Test the reasonableness of an inventory valuation made by some other means.
C) Estimate ending inventory for interim financial reports.
D) Estimate the required inventory quantity needed for the next period.

Question

Quizplus · Accepted Answer

The gross margin method is not used to estimate the required inventory quantity needed for the next period. It is primarily used for the other three purposes mentioned in the question: to estimate replacement cost of ending inventory lost or damaged, to test the reasonableness of an inventory valuation made by some other means, and to estimate ending inventory for interim financial reports.

The Gross Margin Method Is Frequently Used for All of the Following