Identify Which Inventory Costing Method (LIFO or FIFO) Achieves the Effect

question 171

Multiple Choice

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items:
-Prices are declining; gross margin is higher with this method.

• A)LIFO
• B)FIFO

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Definitions:

Short Run

A period in which at least one factor of production is fixed and cannot be altered, limiting the immediate operational changes a business can make.

All-Natural Ice Cream

Ice cream made exclusively with natural ingredients, without artificial flavors or preservatives.

Market Price

The current price at which a good or service can be bought or sold in a competitive market.

Break-Even Price

The price point at which total revenues equal total costs, resulting in no profit or loss for the business, used as a measure of financial sustainability.