Question

In a period of rising prices, Select one: a. Cost of goods sold under we b. Inventory under weighted-av Determine the Single Equivalent Discount (SED) that would replace these three discounts; 33&1/3%,25%,87%.

Answer 1

In a period of rising prices, the cost of goods sold (COGS) under weighted-average (WE) method is affected. The Single Equivalent Discount (SED) that would replace the discounts of 33&1/3%, 25%, and 87% is approximately 7.20145%.

Step-by-step explanation:

In a period of rising prices, the cost of goods sold (COGS) under weighted-average (WE) method is affected, while the inventory under weighted-average is not directly impacted. The Single Equivalent Discount (SED) that would replace three discounts of 33&1/3%, 25%, and 87% can be calculated by multiplying the complements of the discounts. By applying the formula (1 - discount) n times, where n is the number of discounts, we can find the SED.

For the given discounts (33&1/3%, 25%, and 87%), the complements are (1 - 33&1/3% = 66&2/3%), (1 - 25% = 75%), and (1 - 87% = 13%).

The SED can be calculated as follows:

1. SED = (1 - 66&2/3%) * (1 - 75%) * (1 - 13%)
2. SED = 0.3333 * 0.25 * 0.87 = 0.0720145

Therefore, the Single Equivalent Discount (SED) that would replace the three discounts of 33&1/3%, 25%, and 87% is approximately 0.0720145, or 7.20145%.

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