When a Company Using the LIFO Inventory Method Reduces Its

question 104

True/False

When a company using the LIFO inventory method reduces its inventory levels at the end of the year,it can lead to LIFO liquidation.

---

Definitions:

Utilities

Utilities refer to services such as electricity, water, and gas that are essential for communities and businesses to operate effectively.

High-low Method

A technique used in managerial accounting to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and their associated costs.

Electrical Cost

The expense incurred from consuming electricity in operations, often considered a variable cost in manufacturing or service provision environments.

Fixed Component

The portion of a cost or expense that remains constant regardless of changes in the level of activity or production.