The Wester Corporation Produces Three Products with the Following Costs

question 153

Multiple Choice

The Wester Corporation produces three products with the following costs and selling prices:
The company has insufficient capacity to fulfill all of the demand for these three products.
-If direct labor hours are the constraint,then the ranking of the products from the most profitable to the least profitable use of the constrained resource is:

• A) A, B, C
• B) B, A, C
• C) C, A, B
• D) A, C, B

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Definitions:

LIFO Periodic

An inventory valuation method, Last In First Out, used in periodic inventory systems where the last items added to the inventory are assumed to be sold first.

Perpetual LIFO

Perpetual LIFO, or Last-In, First-Out, is an inventory accounting method continuously updating inventory and costs of goods sold by assuming the last items purchased are the first to be sold.

Ending Inventory

The worth of products ready for purchase at the conclusion of a financial period.

Cost Flow Assumption

A method adopted by businesses to value inventory and determine the cost of goods sold, such as FIFO (First In, First Out) or LIFO (Last In, First Out).