When the LIFO Costing Method Is in Use,the Seller

question 40

Multiple Choice

When the LIFO costing method is in use,the seller:

• A)Must sell the most recently acquired units first.
• B)Must sell the oldest unit in inventory first.
• C)Assumes that the most recently acquired units are sold first.
• D)Assumes that the oldest units in inventory are sold first.

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Definitions:

Activity Cost Pool

A grouping of all the costs associated with a particular activity, used in activity-based costing.

Cost Allocation Base

A method or factor used to assign costs in an equitable manner to various cost objects like departments, products, or projects.

Departmental Overhead Rate

A rate used to allocate overhead costs to individual departments based on relevant criteria, such as direct labor hours or machine hours.

Departmental Overhead Rate

A calculation used to allocate indirect costs to specific departments, based on a relevant activity base, enhancing cost accuracy per department.