This MB-920 practice question tests your understanding of describe dynamics 365 supply chain management. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A retail company wants to track the cost of goods sold using a method that assumes the most recently purchased items are sold first. Which costing method should they configure?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "first"
Why it matters: Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Standard cost
Why wrong: Standard cost uses predetermined costs, not actual purchase order costs.
FIFO
Why wrong: FIFO (First In, First Out) assumes oldest items are sold first.
Weighted average
Why wrong: Weighted average calculates an average cost of all inventory.
LIFO
LIFO (Last In, First Out) assumes most recently purchased items are sold first.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
LIFO
D is correct because LIFO (Last In, First Out) assumes the most recently purchased items are sold first, which matches the company's requirement to track cost of goods sold using that assumption. In Dynamics 365 Supply Chain Management, LIFO is an inventory costing method that can be configured in the item model group to calculate the cost of goods sold based on the cost of the latest received inventory.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Standard cost
Why it's wrong here
Standard cost uses predetermined costs, not actual purchase order costs.
FIFO
Why it's wrong here
FIFO (First In, First Out) assumes oldest items are sold first.
Weighted average
Why it's wrong here
Weighted average calculates an average cost of all inventory.
LIFO
Why this is correct
LIFO (Last In, First Out) assumes most recently purchased items are sold first.
Clue confirmation
The clue word "first" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
The trap here is that candidates often confuse LIFO with FIFO, assuming 'most recently purchased' means the newest items are sold last, but the question explicitly states 'sold first,' which directly points to LIFO.
Detailed technical explanation
In Dynamics 365 Supply Chain Management, LIFO is implemented through the item model group where the costing method is set to 'LIFO' and the inventory model is configured to use the 'Last In, First Out' principle for cost calculation. This method is particularly useful in inflationary environments where matching current costs with current revenues provides a more accurate profit margin, though it may result in lower taxable income. Under the hood, the system tracks inventory receipts and issues in chronological order, applying the cost of the most recent receipt to the first issue.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
What to study next
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FAQ
Describe Dynamics 365 Supply Chain Management — This question tests Describe Dynamics 365 Supply Chain Management — Read the scenario before looking for a memorised answer..
The correct answer is: LIFO — D is correct because LIFO (Last In, First Out) assumes the most recently purchased items are sold first, which matches the company's requirement to track cost of goods sold using that assumption. In Dynamics 365 Supply Chain Management, LIFO is an inventory costing method that can be configured in the item model group to calculate the cost of goods sold based on the cost of the latest received inventory.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Yes — watch for: "first". Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 24, 2026
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