________ Is Based on the Level of Capacity Utilization That

question 201

Multiple Choice

________ is based on the level of capacity utilization that satisfies average customer demand over periods generally longer than one year.

• A) Practical capacity
• B) Theoretical capacity
• C) Master-budget capacity utilization
• D) Normal capacity utilization

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Definitions:

FIFO

First In, First Out, an inventory valuation method where goods purchased or produced first are sold or used first.

LIFO

An inventory valuation method, "Last-In, First-Out," where the most recently produced items are recorded as sold first.

Average Cost

A method of inventory valuation which calculates the cost of goods sold based on the average cost of all similar items in inventory.

Periodic Inventory System

An accounting method where the inventory is physically counted at specific intervals to determine the cost of goods sold and the ending inventory balance.