Which of the Following Inventory Costing Methods Yields the Highest

question 129

Multiple Choice

Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs?

• A) specific identification
• B) weighted-average
• C) last-in, first-out
• D) first-in, first-out

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Definitions:

Cost Drivers

Factors or activities that have a direct impact on the total cost of a product or service.

Direct Labor Hours

The total hours worked by employees directly involved in the production process.

Absorption Cost

A cost accounting method that totals all costs associated with manufacturing a product, including all direct and indirect costs.