Under Which Method of Inventory Cost Flows Is the Cost

question 64

Multiple Choice

Under which method of inventory cost flows is the cost flow assumed to be in the reverse order in which the expenditures were made?

• A)Average cost
• B)Last-in,first-out
• C)First-in,first-out
• D)Last-in,last-out

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Definitions:

Diminishing Returns

A principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower incremental per-unit returns.

Short Run

A time period during which at least one input, such as plant size, is fixed and cannot be changed by the firm.

Average Total Cost Curve

A graphical representation showing the average total cost of producing various output levels, typically U-shaped due to economies and diseconomies of scale.

Total Cost

The aggregate cost involved in manufacturing goods or offering services, which covers both stable and changeable outlays.