Under the LIFO Flow Assumption, the Cost of This Item

question 51

Multiple Choice

Under the LIFO flow assumption, the cost of this item to be included as inventory in the company's year-end balance sheet is:

• A) $36,000.
• B) $42,000.
• C) $36,500.
• D) $37,500.

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Definitions:

Costs

The total expenses incurred by a business in producing goods or providing services.

Variable Cost

relates to expenses that vary directly with the level of production or business activity, such as raw materials and labor costs.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to cover fixed costs and to generate profit.

Operating Cash Flow

denotes the cash generated from a company’s normal business operations, indicating whether a company can maintain and grow its operations.