Which Costing Method Cannot Be Used to Determine the Cost

question 192

Multiple Choice

Which costing method cannot be used to determine the cost of inventory items before lower-of-cost-or-net realizable value is applied?

• A) Specific identification
• B) FIFO
• C) LIFO
• D) All of these methods can be used.

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Definitions:

Contribution Margin

The margin between the income from sales and the costs that vary, pointing out the contribution towards absorbing fixed charges and producing profits.

Variable Manufacturing Costs

Costs of production that fluctuate with the volume of output, including expenses like raw materials and direct labor.

Variable Selling

Costs related to selling activities that vary with sales volume, distinct from fixed sales costs.

Fixed Manufacturing Overhead

Regular, unchanging costs associated with operating a manufacturing facility, excluding variable costs, such as rent, utilities, and salaries for management.