In Applying the LCM Rule, the Inventory of Apparel Would

question 70

Multiple Choice

In applying the LCM rule, the inventory of apparel would be valued at:

• A)$108,000.
• B)$ 90,000.
• C)$110,000.
• D)$115,000.$90,000 designated market value is less than $108,000 cost.

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Definitions:

Relevant Range

The span within which the assumptions about fixed and variable cost behaviors are valid.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Variable Costing

An accounting method that only includes variable production costs (materials, labor) in product cost, excluding fixed costs.

Mixed Cost

A cost that has both fixed and variable components, which changes with the level of output but not in direct proportion.