Similar to the Example of FIFO and LIFO Inventory Accounting

question 271

Multiple Choice

Similar to the example of FIFO and LIFO inventory accounting methods in the text, a college store purchased sweatshirts for the upcoming fall semester. Using the following data, where a total of 100 sweatshirts were purchased by the store and placed in inventory, select the correct statement from the following choices.

• A) FIFO would provide the least profit.
• B) FIFO would provide the most profit.
• C) LIFO or FIFO will produce the same amount of profit.
• D) LIFO would provide the most profit.

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Definitions:

Space Occupied

The area utilized by a business for its operations, including manufacturing, storage, and office space.

Step-down Method

A cost allocation method that sequentially assigns service department costs to other departments, including other service departments, based on specified criteria.

Machine Hours

A measure of production time, representing the total hours that machinery is operated in the manufacturing of a product.

Number Of Employees

The overall number of people working for a firm, encompassing both those in full-time and part-time positions.