Asked by Angelica Bihasa on May 29, 2024
Verified
A disadvantage of the weighted-average method is that:
A) current prices have no more significance than prices of goods bought a month earlier.
B) net income will not fluctuate as much as with other methods.
C) it takes into account the number of units purchased at each amount, not a simple average cost.
D) All of the above is correct.
Weighted-Average Method
An inventory costing method that calculates the cost of ending inventory and cost of goods sold using the average cost of all similar items in inventory.
Net Income
The amount of money left after all expenses, taxes, and costs have been subtracted from total revenue; a key indicator of a company's profitability.
Current Prices
Prices of goods, services, or assets at the current time, without adjustment for inflation.
- Master the different techniques employed in inventory valuation, including FIFO, LIFO, Specific Invoice, and Weighted-average.
- Differentiate between the pros and cons associated with different techniques of inventory assessment.
Verified Answer
Learning Objectives
- Master the different techniques employed in inventory valuation, including FIFO, LIFO, Specific Invoice, and Weighted-average.
- Differentiate between the pros and cons associated with different techniques of inventory assessment.
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