CPIM-ECO question 104 discussion

answered

Which of the following costing methods shows the greatest apparent profit in a time of
inflation?

  • A. Last in, first out
  • B. First in, first out
  • C. Standard cost
  • D. Actual cost
Created 1 month ago by Yuliya0504

Yuliya0504

Isn't it LIFO? During inflation environment, cost of goods is higher whereas remaining inventory balance in lower

ilya.rabinovich

The question is asking about apparent profit (Revenue-Cost=Profit). During times of inflation, Cost of goods is higher for things coming in vs. things already on the shelf. By using the FIFO costing method, you will be calculating "Cost" when things came in at a cheaper price, which shows greater profit.