If Costs of Manufacturing Inputs Fluctuate from Period to Period

question 14

Multiple Choice

If costs of manufacturing inputs fluctuate from period to period, which of the following methods is more useful for cost control?

• A)FIFO
• B)LIFO
• C)weighted average
• D)equivalent units

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Definitions:

Direct Write-Off Method

An accounting method where bad debts are charged against income at the time they are deemed irrecoverable, rather than being anticipated in advance.

Interest

Interest is the cost paid for borrowing money, typically expressed as a percentage of the amount borrowed over a certain period of time.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.

Direct Write-Off Method

An accounting practice where uncollectible accounts receivable are directly written off against revenue at the time they are deemed to be uncollectible.