The Managers of Hong Company Receive Performance Bonuses Based on the Net

question 34

Multiple Choice

The managers of Hong Company receive performance bonuses based on the net income of the firm.Which inventory costing method are they likely to favor in periods of declining prices?

• A)LIFO
• B)Average-Cost
• C)FIFO
• D)Physical inventory method

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price level during a specified time period.

Production Process

The sequence of actions or steps involved in producing a good or service, encompassing all activities from raw material to finished product.

Changes

Variations or modifications in conditions, situations, or states that impact entities or environments over time.

Elasticity of Supply

A gauge for the responsiveness of the amount of a product provided to variations in its price.