Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
A) Average cost
B) First-in, first-out
C) Moving-average
D) Weighted-average

Question

Quizplus · Accepted Answer

First-in, first-out (FIFO) best approximates specific identification of the actual flow of costs and units in most manufacturing situations, as it assumes that the first items received or produced are the first items sold or used. This method reflects the actual physical flow of goods in many manufacturing operations, especially those that use raw materials or components with specific lot or batch numbers.

Which Method of Inventory Pricing Best Approximates Specific Identification of the Actual