Selecting the Lowest Cost Technology

question 121

Multiple Choice

Selecting the lowest cost technology:

• A)will result in the highest long-run NPV.
• B)could rule out future flexibility.
• C)will minimize the cost of future upgrades.
• D)may not permit future expansion.

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Definitions:

FIFO Method

An inventory valuation method where the first items acquired are the first ones sold or used, standing for First In, First Out.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory values are determined by averaging the costs of all items available for sale during the period.

Average Costing

An inventory costing method where all units are valued at the average cost of all similar items in the inventory.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process, then assigns them to products.