\"Inventory Costing Methods\" Please respond to the following: Use the Internet

Question

"Inventory Costing Methods" Please respond to the following:

Use the Internet to research the annual report of at least three (3) merchandising companies. Determine the costing method (Last In First Out [LIFO], First In First Out [FIFO], and weighted average) that is used to record inventory. Next, watch C. Pence’s video:

https://www.youtube.com/watch?v=UGs1EXalrZo

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

Explanation / Answer

There are different types of inventory costing methods like LIFO, FIFO, weighted average method etc.

When we buy from inventories from an supplier its value will change over an period. And so with the same product bought at different rates over an period would result in group of items with same identity but different rates. So to come to an specific rate for all items at the time of sale, we use different methods of costing.

In FIFO method, first product bought is also sold first, that is first in first out.

In LIFO method, last in is sold first time that is last in last out.

And in average weighted, an average rate is taken by averaging all the rates and the same rate is used while the products are sold.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.