A Major Advantage of Using the FIFO Process-Costing Method Is

question 61

Multiple Choice

A major advantage of using the FIFO process-costing method is that:

• A) FIFO makes the unit cost calculations simpler
• B) in contrast with the weighted-average method, FIFO is considered GAAP
• C) FIFO provides managers with information about changes in the costs per unit from one period to the next
• D) in the period of rising prices, it leads to lower operating income and lower tax payments, saving the company cash and increasing the company's value

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Definitions:

Loanable Funds

The market for borrowing and lending of capital, where savers supply funds to borrowers, usually at an interest rate.

Business Partnership

A legal form of business operation between two or more individuals who share management and profits.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the central bank.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.