TNM Inc Uses LIFO and Was Founded in on January 1

question 19

Multiple Choice

TNM Inc. uses LIFO and was founded in on January 1, 2017. At the end of 2017, TNM disclosed that the LIFO reserve was $1 million, indicating that the ending inventory balance would have been $1 million higher under FIFO. At the end of 2018, the LIFO reserve decreased to $0.5 million and inventory balances were relatively stable compared to 2017. Which of the following is true regarding TNM's costs?

• A) Costs have been increasing since TNM was founded because the LIFO reserve is greater than zero.
• B) Costs have been decreasing since TNM was founded because the LIFO reserve is greater than zero.
• C) Costs were increasing in 2018, but decreasing in 2017.
• D) Costs were decreasing in 2018, but increasing in 2017.

Understand the components and calculations involved in a job-order costing system.

Calculate the predetermined overhead rate and apply manufacturing overhead to jobs.

Prepare journal entries for transactions relevant to job-order costing systems including raw materials, labor, and overhead.

Determine and analyze underapplied or overapplied manufacturing overhead and its financial implications.

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Definitions:

Institutional Labor Economics

A branch of economics that studies the way institutions and societal norms impact labor markets, employment, and wage setting.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and easy entry and exit for businesses, leading to optimal distribution of resources.

Conflict Of Interest

A situation in which a person's personal interests could potentially interfere with their professional duties or responsibilities.

Industrial Relations School

A theoretical framework that studies the social, economic, and psychological relations between management and labor, including unions, workplaces, and public policy.