Which of the following statements is correct with respect to the differences between using the weighted-average method or the FIFO method of preparing a process production report?
A)Use of FIFO is acceptable for GAAP,while use of weighted-average method is not.
B)FIFO is simpler to use than the weighted-average method.
C)Use of FIFO or weighted-average results in large differences for companies that maintain minimal work-in-process inventory.
D)The weighted-average method is often simpler,less costly to prepare,and provides useful information for decision-making.

Question

Quizplus · Accepted Answer

The statement that the weighted-average method is often simpler, less costly to prepare, and provides useful information for decision-making is correct. This is because it involves computing an average cost, which is easier than tracking and valuing individual units of inventory. Additionally, both methods are acceptable for GAAP, and their use depends on the specific circumstances of the company. The statement about minimal work-in-process inventory is not necessarily true, as it depends on the specific flow of production in each company.

Which of the Following Statements Is Correct with Respect to the Differences