The FIFO method combines last period's costs as well as this period's costs in the calculation of unit costs.The FIFO method separates the costs of beginning inventory from the costs that were incurred during the current period.

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The FIFO method does not combine last period's costs with this period's costs in the calculation of unit costs. Instead, it assumes that the oldest costs are the first to be sold, so the unit costs are based solely on the costs incurred during the current period.

The FIFO Method Combines Last Period's Costs as Well as This