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Which inventory costing method would a company that wishes to maximize profits in a period of rising prices use?
In a period of rising prices, the oldest inventory, or the inventory used in FIFO would be the least expensive. Thus, the profit margin would be the largest here.
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Assuming constant inventory quantities, which of the following inventory costing methods will produce a lower inventory turnover ratio in an inflationary economy?
In a period of rising prices, the oldest inventory, or the inventory used in FIFO would be the least expensive. Thus, the profit margin would be the largest here.
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During periods of inflation, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory valuation methods?
Only under FIFO would the use of a perpetual system result in the same dollar amount of ending inventory as a periodic system.
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Which of the following costing methods will yield the lowest inventory value?
Variable costing typically produces the lowest inventory values since only variable costs are capitalized.
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Which of the following costs is deducted from revenues of a manufacturing company in order to determine gross margin, but not deducted from revenues to determine contribution margin?
Under the absorption approach, all fixed and variable manufacturing overhead is part of cost of goods sold to determine an entity's gross margin.
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The equivalent units of production method can be calculated by using either:
Using the FIFO method accounts for work to be finished and using the weighted average method blends the units.
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