During Periods of Increasing Costs, the Use of the FIFO

question 16

True/False

During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

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Definitions:

June

The sixth month of the year in the Gregorian calendar, often associated with the start of summer in the northern hemisphere.

Materials Price Variance

A measure of the difference between the actual cost of materials and the standard cost, multiplied by the actual quantity of materials used.

January

January is the first month of the year in the Gregorian and Julian calendars, characterized by cold weather in the northern hemisphere and warm weather in the southern hemisphere.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.