Which of the following cost flow assumptions most closely follows the logical product flow in a process costing environment?
A)Average
B)LIFO
C)FIFO
D)HIFO

Question

Quizplus · Accepted Answer

FIFO, or first in, first out, assumes that the first units produced are also the first units sold, which is similar to the logical flow of a process costing environment where materials and products move in a sequential order. Therefore, FIFO is the best choice for cost flow assumptions in a process costing environment.

Which of the Following Cost Flow Assumptions Most Closely Follows