Which Costing Method Assumes That the Cost of the First

question 161

Multiple Choice

Which costing method assumes that the cost of the first few items acquired should be assigned to the first items sold?

• A)Specific identification
• B)FIFO
• C)Average-cost
• D)LIFO

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Definitions:

Excess Capacity

The situation where a company can produce more than is required to meet the demand, usually indicating underutilization of resources.

Special Order Price

The price at which goods or services are sold under a special order, often differing from standard pricing.

Net Income

The total earnings of a company after subtracting all expenses and taxes from revenue, indicating its profitability.

Variable Costing

A method of accounting where only variable production expenses, including direct materials, direct labor, and variable manufacturing overhead, are counted towards the cost of products.