During Periods of Consistently Falling Prices,the FIFO Inventory Method Will

question 68

True/False

During periods of consistently falling prices,the FIFO inventory method will produce the highest possible amount of net income.

---

Definitions:

Contribution Margin

The selling price per unit minus the variable cost per unit, which helps determine how much sales contribute to covering fixed costs and generating profit.

Variable Costs

These are costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Fixed Costs

Costs that do not change with the level of goods or services produced within a certain range; such costs are incurred regardless of business activity levels.

Break-even Point

The point at which total income matches total costs, leading to a situation where there is no gain or deficit.