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
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
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
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