Which Costing Method Tends to Level Out the Effects of Cost

question 102

Multiple Choice

Which costing method tends to level out the effects of cost increases or decreases?

• A)Specific identification
• B)FIFO
• C)Average-cost
• D)LIFO

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Output Level

The quantity of goods or services produced by a company, industry, or economy within a certain period.

Total Costs

The total of all costs associated with the creation of goods or services, encompassing both constant and fluctuating expenses.

Maximizing Profits

The process of adjusting inputs and outputs in production or service delivery to achieve the highest possible financial gain.