[amp_mcq option1=”Price of material is increasing” option2=”Price of material is decreasing” option3=”Price of material is fluctuating” option4=”Price of material is stable” correct=”option1″]
The correct answer is: A. Price of material is increasing.
HIFO method of issue of material is useful when the price of material is increasing. This is because the HIFO method ensures that the materials that are issued first are the ones that were purchased at the lowest price. This can help to reduce the cost of materials, especially if the price of materials is increasing.
The other options are not correct because they do not necessarily mean that the HIFO method of issue of material is useful. For example, if the price of material is decreasing, then the HIFO method may not be useful, as it will result in the materials that are issued first being the ones that were purchased at the highest price. Similarly, if the price of material is fluctuating, then the HIFO method may not be useful, as it will not necessarily result in the materials that are issued first being the ones that were purchased at the lowest price. Finally, if the price of material is stable, then the HIFO method may not be useful, as it will not necessarily result in any cost savings.