Which of the Following Inventory Costing Methods Yields the Highest

question 54

Multiple Choice

Which of the following inventory costing methods yields the highest cost of goods sold when costs are rising during the accounting period?

• A) Specific-unit-cost
• B) Average-cost
• C) Last-In, First-Out
• D) First-In, First-Out

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other depository institutions by a central bank for loans, used as a tool for regulating monetary policy.

Cost of Capital

The minimum return a corporation must achieve on its investment activities to keep its market price stable and entice financing.

Cost of Equity

The return that shareholders require or expect to earn on their investment in a company’s equity.

Horizontal Merger

A merger between two companies operating in the same industry, often aiming to create synergies, expand market share, or reduce competition.