If the Cost to Purchase a Unit of Inventory Does

question 88

Multiple Choice

If the cost to purchase a unit of inventory does not change, ending inventory:

• A) will be the highest under FIFO.
• B) will be the highest under LIFO.
• C) cannot be computed using the average-cost method.
• D) will be the same under LIFO and FIFO.

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Definitions:

Total Producer Surplus

The difference between the total revenue that producers receive and the minimum amount they would be willing to accept for their goods or services.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive due to market price.

Good X

An unspecified product or commodity in economics, used in theoretical models and discussions.

Producer Surplus

The difference between the actual price producers receive for a product and the minimum price they would accept.