Selection of an Inventory Cost Formula by Management Should Be

question 55

Multiple Choice

Selection of an inventory cost formula by management should be influenced most by the:

• A) fiscal year end.
• B) physical flow of goods.
• C) goal of reporting inventory at its lowest cost.
• D) income tax effects.

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Definitions:

Mixed

Pertaining to costs or variables that have both fixed and variable components, changing with the level of activity but not directly proportional to it.

Selling Price

The cost at which consumers can purchase a product or service.

Contribution Margin

The amount remaining from sales revenue after all variable expenses have been deducted, indicating how much revenue is contributing to covering fixed expenses and generating profit.

Unit Sold

The total number of individual items or products that have been sold by a business during a given period.