Description
Week 6 Discussion
- Use the Internet to research the annual report of at least one (1) merchandising company. Determine which costing method (Last In First Out [LIFO], First In First Out [FIFO], or weighted average cost) that is used to record inventory by your selected company.
- Identify the three (3) primary advantages and three (3) primary disadvantages of using the costing method (LIFO, FIFO, and weighted average) that is used to record inventory.
- Provide support for your response.
Explanation & Answer
Good Luck.
Merchandising Company- Inventory Costing Methods
The most common three methods of inventory costing, used by many companies are
“First in, First out” (FIFO), “Last In- First Out” (LIFO) and Weighted average method.
Under FIFO method, inventory is valued on the assumption that the first good which is
purchased by a company for resale will turn out to be the first good sold. Under LIFO
method, inventory is valued on the assumption that the last good which is purchased by a
company for resale will turn out to be the first good sold. Under weighted average c...
