Which of the Following Values Remains the Same Irrespective of the Inventory

question 120

Multiple Choice

Which of the following values remains the same irrespective of the inventory valuation method used by a company? Assume the cost of inventory is rising.

• A)purchases
• B)cost of goods sold
• C)ending merchandise inventory
• D)net income

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales within a certain range, such as rent, salaries, and insurance.

Variable Cost

A cost that varies with the level of output or activity, such as materials and labor costs.

Operating Leverage

A financial ratio that measures the degree to which a firm or project can increase operating income by increasing revenue.

Operating Income

The income earned from a company's day-to-day operations, calculated before taking into account interest and taxes.