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The "cocktail party effect" (the ability to pick out one's name in a room full of chattering people) illustrates the concept of
LIFO Inventory
A method of inventory valuation where the most recently produced or acquired items are recorded as sold first, standing for Last In, First Out.
Absorption Costing
An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.
Variable Costing
A costing approach where variable costs are assigned to inventory and fixed costs are treated as expenses in the period they are incurred, focusing on the costs that change with production levels.
Absorption Costing
An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.
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