The Inventory Method That Will Always Produce the Same Amount

question 116

Multiple Choice

The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:

• A) FIFO.
• B) LIFO.
• C) Weighted average.
• D) None of these answer choices are correct.

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Definitions:

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions.

Period Cost

Expenses that are not directly tied to the production process and are charged to the period in which they are incurred.

Future Decisions

Decisions that will be made in the future, often based on forecasts or projections.

Variable Cost Method

A pricing strategy that only accounts for direct materials, direct labor, and variable manufacturing overhead costs, excluding any fixed costs from its calculations.