Which of the Following Statements Is INCORRECT Regarding the Overriding

question 161

Multiple Choice

Which of the following statements is INCORRECT regarding the overriding objectives underlying inventory standards?

• A) Report an inventory cost on the statement of financial position that is representative of the inventory's recent cost.
• B) Choose an approach that corresponds as closely as possible to the physical flow of goods.
• C) Use the same method for all inventory assets that have similar economic characteristics.
• D) It is permissible under ASPE to use any inventory method, including LIFO.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on the predetermined overhead rate.

Power

In a business context, it often refers to the influence or capacity of a company or individual to effect decisions and control resources.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of the variable overhead applied to a production process.

Variable Overhead Rate Variance

The difference between the actual variable overhead rate incurred and the expected (or standard) rate, multiplied by the actual activity level.