Which of the Following Inventory Costing Methods Yields the Highest

question 133

Multiple Choice

Which of the following inventory costing methods yields the highest Gross profit when costs are rising during the accounting period?

• A)Specific- unit- cost
• B)Last- In, First- Out
• C)Average- cost
• D)First- In, First- Out

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Definitions:

Incremental Cash Flows

The additional cash flows from undertaking a project or investment.

NWC

Net Working Capital, which is calculated as current assets minus current liabilities, indicating the company's short-term financial health.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not influence future decisions.

Incremental Cost

The additional cost that is incurred by producing one more unit of a good or service.