Which Statement Is Correct About Using a Cost Flow Assumption

question 29

Multiple Choice

Which statement is correct about using a cost flow assumption?

• A)An organization must use the same cost flow assumption as other organizations in its industry.
• B)There is only one acceptable cost flow assumption under GAAP in Canada.
• C)In Canada, organizations can use the FIFO or weighted average cost flow assumptions.
• D)In Canada, organizations can use the FIFO, LIFO or weighted average cost flow assumptions.

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Definitions:

Overtime

Additional hours worked beyond the standard working hours, often resulting in higher pay rates.

Master Production Schedule

A plan for the production of individual items at specific times in the future.

Aggregate Plan

A medium-term plan that outlines the total production levels, inventory, and workforce size required to meet anticipated demand.

Safety Inventory

A buffer stock kept to protect against variability in demand or supply, ensuring sufficient product availability.