BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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first-in, first-out method (FIFO)
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last-in, first-out method (LIFO)
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weighted average cost method
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Detailed explanation-1: -What Is Average Cost Method? Average cost method assigns a cost to inventory items based on the total cost of goods purchased or produced in a period divided by the total number of items purchased or produced. Average cost method is also known as weighted-average method.
Detailed explanation-2: -In the weighted average cost method, the cost of goods available for sale is divided by the number of units available for sale and is commonly used when inventory items are so melded or identical to each other that it is impossible to assign specific costs to single units.
Detailed explanation-3: -The weighted average cost method calculates the average cost of your inventory, per unit. You can calculate WAC by dividing your cost of goods sold (COGS) by the total number of units in your inventory.
Detailed explanation-4: -Under the average-cost inventory method, to determine the average cost per unit: the cost of beginning inventory plus the cost of purchases is divided by the number of units available.
Detailed explanation-5: -The average cost calculation formula is as follows: To calculate average cost, take the cost of goods available for sale and divide it by the total number of items from the beginning inventory and purchases.