Use of the FIFO Cost Flow Assumption Means That

question 29

Multiple Choice

Use of the FIFO cost flow assumption means that

• A) Ending inventory items are the ones most recently purchased
• B) Goods are removed from inventory at their average cost
• C) The periodic costing system is used
• D) The beginning inventory contains the oldest costs
• E) All of these are correct answers.

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Definitions:

Common Fixed Expenses

Overhead costs that do not vary with production volume and are shared across different departments or products.

Break-Even

The point at which total revenues equal total costs, resulting in no profit or loss for the business.

Sales Dollars

A measurement of revenue generated from the sale of goods or services, expressed in monetary units.

Net Operating Income

The total profit of a company after operating expenses are deducted from operating revenues, but before interest and taxes are deducted.