Business Finance
inventory costing methods

Question Description

I’m studying for my Accounting class and don’t understand how to answer this. Can you help me study?

identify the primary benefits in using the costing method (LIFO, FIFO, and weighted average) that is used to record inventory. Explain least three (3) reasons that would lead each of your chosen companies to switch to a different costing method.

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

LIFO

It is an appropriate method for matching cost and revenue 

It is simple to operate easy to understand 

It facilitates complete recovery of material cost 

It is more suitablets when prices are rising

FIFO

It is suitable for bulky materials with high unit prices 

It helps avoid deterioration and obsolescence

It is also easy to understand and operate

Value of closing stock materials will reflect current price 

Weighted average -

Less paperwork is required

Method is much more easi than the other two types 

Smoothness out fluctuations in support price

It assumes values of identical items as equal 

Most managers tend to choose different inventory costs for the following reasons -

1) Net income effect -Managers prefer to report higher income for their companies 

2) Income tax effects - Managers tend to want to pay as less as possible by as per laws .

3) easy to compute and faster preparation of report 








warrenc (144)
Boston College

Anonymous
The tutor managed to follow the requirements for my assignment and helped me understand the concepts on it.

Anonymous
The tutor was knowledgeable, will be using the service again.

Anonymous
Awesome quality of the tutor. They were helpful and accommodating given my needs.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors