Which of the Following Is Not an Indicator of a Company

question 33

Multiple Choice

Which of the following is not an indicator of a company whose costing system needs to be more accurate?

• A) Competitors' prices seem unrealistically low.
• B) Products that are difficult to make have low profit margin.
• C) At the end of the year, there is a significant amount of overapplied overhead.
• D) Customers are not deterred by a significant increase in prices.

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Definitions:

Periodic System

An inventory system where inventory levels are updated in the accounting records on a periodic basis, typically at the end of an accounting period, rather than after each purchase or sale.

LIFO Method

The "Last In, First Out" inventory valuation method, where the most recently produced items are recorded as sold first.

Inventory

The raw materials, work-in-progress products, and finished goods considered to be the portion of a business's assets that are ready or will be ready for sale.

FIFO Method

The "first-in, first-out" inventory costing method, where the costs of the earliest goods purchased or produced are the first to be expensed.