The FIFO method differs from the weighted-average method in that the FIFO method allocates costs based on whole units whereas the weighted-average method uses equivalent units.

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Quizplus · Accepted Answer

The FIFO (First-In, First-Out) method and the weighted-average method both use equivalent units to allocate costs, but they differ in how they treat the costs of beginning inventory and current period costs. FIFO separates the costs of the beginning inventory from the costs of units produced in the current period, while the weighted-average method blends the costs of the beginning inventory with the costs of production during the current period to compute an average cost.

The FIFO Method Differs from the Weighted-Average Method in That