Which of the Following Inventory Costing Methods Will Always Result

question 198

Multiple Choice

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?

• A) FIFO and weighted-average cost
• B) FIFO and LIFO
• C) Specific identification and FIFO
• D) LIFO and weighted-average cost
• E) LIFO and specific identification

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Definitions:

Contribution Margin

The difference between total sales revenue and total variable costs, used to cover fixed costs and generate profit.

Contribution Format

An income statement format that separates fixed and variable costs, facilitating analysis of the impact of sales volume on profit.

Unit Contribution Margin

The amount that the sale of one unit contributes toward covering fixed costs and then to profit, calculated as the selling price per unit minus the variable cost per unit.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue remaining after variable costs are subtracted, indicating how efficiently a company can produce and sell products.