ECONOMICS

Detailed explanation-1: -A major advantage of FIFO is the relative computational simplicity and its reporting of a more-representative average unit cost when input prices fluctuate markedly from month to month.

Detailed explanation-2: -The obvious advantage of FIFO is that it’s the most widely used method of valuing inventory globally. It is also the most accurate method of aligning the expected cost flow with the actual flow of goods which offers businesses a truer picture of inventory costs.

Detailed explanation-3: -The major benefit of the weighted average method is simplicity. The major disadvantage is that accuracy and performance measurements are impaired. The three methods of allocating support department costs to producing departments are the direct, weighted average, and reciprocal methods.

Detailed explanation-4: -FIFO provides managers with information about changes in the costs per unit from one period to the next. In a period of rising prices, the weighted-average method will decrease taxes because cost of goods sold will be higher and operating income lower.

Detailed explanation-5: -Answer: C) Under FIFO, the ending inventory is based on the latest units purchased. Explanation: FIFO is an acronym for First In, First Out. Under this inventory valuation method, the goods which were purchased earliest are sold first.