In a period of rising prices,the inventory costing method that will tend to smooth out erratic changes in costs is
A)FIFO.
B)LIFO.
C)Weighted average.
D)Specific identification.

Question

Quizplus · Accepted Answer

Weighted average calculates the average cost of inventory over a period of time, which tends to smooth out erratic changes in costs. During a period of rising prices, FIFO (first-in, first-out) would result in higher costs of goods sold and lower ending inventory values, while LIFO (last-in, first-out) would result in lower costs of goods sold and higher ending inventory values. Specific identification would only be feasible for businesses with unique, identifiable inventory items, and may not be practical for those with large inventories.

In a Period of Rising Prices,the Inventory Costing Method That