The LIFO Inventory Method Assumes That the Cost of the Latest

question 182

Multiple Choice

The LIFO inventory method assumes that the cost of the latest units purchased are

• A) the last to be allocated to cost of goods sold.
• B) the first to be allocated to ending inventory.
• C) the first to be allocated to cost of goods sold.
• D) not allocated to cost of goods sold or ending inventory.

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Definitions:

Direct Labor Hours

The total time spent by workers directly involved in the manufacturing process to produce goods.

Machine Hours

A measure of production output, calculated by the total hours that machinery is operated in the production of goods.

Single Plantwide Factory Overhead Rate

A method of allocating factory overhead to all units produced across an entire plant, using a single, uniform rate.

Direct Labor Hours

A measure of the total hours worked by workers who are directly involved in the manufacturing process.