Which of the Following Statements Regarding FIFO Is Incorrect

question 54

Multiple Choice

Which of the following statements regarding FIFO is incorrect?

• A) Ending inventory is based on the costs of the most recent purchases.
• B) FIFO is consistent with the physical movement of inventory for most companies.
• C) The first units to come in are assumed to be the first units sold.
• D) FIFO is a specific identification costing method because companies sell their oldest inventory first.

Apply the principles of variance analysis to organizational performance evaluation.

Analyze the implications of standard costing for employee motivation and performance assessment.

Understand the concept of standard costing and variance analysis.

Calculate direct material price, quantity, and total variances.

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Definitions:

Zone Of Tolerance

The area between customers’ expectations regarding their desired service and the minimum level of acceptable service—that is, the difference between what the customer really wants and what he or she will accept before going elsewhere.

Standards Gap

The difference between the quality standards set by a company for its products or services and the actual performance perceived by customers.

Communications Gap

A situation where there is a difference or conflict between the message sent and the message received, often leading to misunderstanding.

Knowledge Gap

The difference between what is known and what needs to be known to effectively understand or perform an activity.