Indicate Whether Each of the Following Statements Is True or False

question 143

Short Answer

Indicate whether each of the following statements is true or false.
1. The FIFO cost flow method assumes that the cost of items purchased last should be assigned to ending inventory
2. The LIFO inventory flow method assumes that the cost of items purchased last should be assigned to the ending inventory
3. Under the weighted average cost flow method, the average unit cost of the inventory is determined by dividing the total inventory cost by the number of units
4. The LIFO cost flow method assumes that the cost of items purchased first is assigned to cost of goods sold first
5. The cost flow assumption used in accounting for inventory must be consistent with the physical flow of the inventory

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Definitions:

Quantity Variances

Quantity variances refer to the difference between the actual and planned (or standard) quantity of input used in production, affecting cost control and operational efficiency.

Efficiency Standard

A benchmark for measuring the productivity and performance of operations, often aiming to minimize waste and maximize output.

Volume Standard

A benchmark measure of quantity, used to gauge efficiency or capacity in production and operations.

Standard Setting Process

The procedures and guidelines used by regulatory bodies to establish and enforce acceptable levels of performance or quality for products or services.