Which Inventory Costing Method Should a Gasoline Retailer Use

question 111

Multiple Choice

Which inventory costing method should a gasoline retailer use?

• A)Average cost
• B)LIFO
• C)FIFO
• D)Either LIFO or FIFO.

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Definitions:

Implicit Cost

The opportunity costs that are not directly paid or incurred but represent the loss of alternative benefits when resources are used in a particular way.

Capital

A resource, such as equipment or buildings, used to produce goods and services.

Implicit Costs

The opportunity costs that are not directly paid for or visibly incurred in financial transactions but represent real costs to economic actors.

Economic Costs

Economic costs include both the explicit costs of production, such as raw materials and wages, and implicit costs, such as opportunity costs.