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The Two Most Common Methods of Costing Inventories in Manufacturing

question 175

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The two most common methods of costing inventories in manufacturing companies are variable costing and absorption costing.


Definitions:

Entry Price

The price at which a security or asset was bought, affecting the calculation of gains and losses for accounting or tax purposes.

Principal Market

The market with the greatest volume and level of activity for the asset.

Active Market

A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Non-performance Risk

Non-performance risk is the risk that a counterparty will not fulfil their contractual obligations, affecting the valuation of financial instruments.

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