Which of the Four Inventory Cost Flow Assumptions Transfers the Most

question 115

Multiple Choice

Which of the four inventory cost flow assumptions transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs?

• A) LIFO
• B) FIFO
• C) Weighted average cost
• D) Specific cost identification

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Definitions:

Budgeted Cost

The forecasted cost of a project or operation, set during the budgeting process and used for planning and control purposes.

Activity Rates

Rates used in activity-based costing to allocate indirect costs to specific products or services based on the activities required to produce them.

Activity Levels

Varying levels of operational or production activity in a company, which can affect budgets and costs.

Cost Pools

Cost pools are groupings of individual costs in an accounting system, categorized according to the process that incurred the cost, used to allocate costs effectively to products or services.