The FIFO Method Provides a Major Advantage Over the Weighted-Average

question 69

Multiple Choice

The FIFO method provides a major advantage over the weighted-average method in that:

• A)the calculation of equivalent units is less complex under the FIFO method.
• B)the FIFO method treats units in the beginning inventory as if they were started and completed during the current period.
• C)the FIFO method provides measurements of work done during the current period.
• D)the weighted-average method ignores units in the beginning and ending work in process inventories.

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Definitions:

Coase Theorem

An economic theory that suggests that if trade in an externality is possible and there are no transaction costs, parties can negotiate solutions to conflict that lead to an efficient outcome regardless of the initial allocation of property.

Externalities

Economic side effects or by-products that affect an uninvolved third party; can be positive or negative.

Pollution Abatement

Measures and processes undertaken to reduce, control, or eliminate pollution from various sources.

Optimal Amount

The quantity of a good or service that yields the highest utility or benefits under specific conditions.