The LIFO Method of Inventory Valuation Bases the Cost of Goods

question 141

Multiple Choice

The LIFO method of inventory valuation bases the cost of goods sold on the cost of

• A) merchandise that has been held in inventory for the longest period of time.
• B) most recent merchandise purchased by the firm.
• C) actual units customers purchased.
• D) merchandise the firm acquired at the lowest cost.

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Definitions:

Property Taxes

Taxes levied by local governments based on the assessed value of property, including land and buildings owned.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering the fixed costs.

Break-even Sales

The amount of revenue needed to cover both fixed and variable costs, resulting in no profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor directly involved in production.