The Inventory Valuation Method That Tends to Smooth Out Erratic

question 60

Multiple Choice

The inventory valuation method that tends to smooth out erratic changes in costs is:

• A) LIFO.
• B) WIFO.
• C) FIFO.
• D) Weighted average.
• E) Specific identification.

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost components, making it partly dependent on the level of output or activity.

High-low Method

A method utilized in cost accounting that predicts variable and fixed expenses by examining the most and least active periods.

Maintenance Cost

Expenses incurred to keep property, equipment, or machinery in efficient operating condition.

Average Cost Data

Refers to the average costs incurred for producing a good, calculated by dividing the total cost of goods produced by the number of goods.