The Selection of an Appropriate Inventory Cost Flow Assumption for an Individual

question 160

Multiple Choice

The selection of an appropriate inventory cost flow assumption for an individual company is made by

• A) the external auditors.
• B) the IASB.
• C) the internal auditors.
• D) company management.

---

Definitions:

Static Budget

A financial plan that does not change over the period for which it is set, regardless of any changes in activity levels.

Standard Cost

A predetermined cost of manufacturing a product or performing a service under normal conditions, used for budgeting and performance evaluation.

Direct Labour

The wages paid to workers who are directly involved in the manufacturing of products or providing services.

Standard Variable Overhead Rate

is a predetermined rate used to allocate variable overhead costs to each unit of production based on a particular activity, such as labor hours.