What is the purpose of using a "cost allocation system" such as FIFO?
A)Determining which expenditures to capitalize into the "inventory" account.
B)Determining which expenditures to expense into the "cost of goods sold" account.
C)Determining how much of the costs recognized in inventory should be expensed in the year.
D)Determining the appropriate valuation of inventories that remain on hand.

Question

Quizplus · Accepted Answer

A cost allocation system like FIFO helps determine how much of the costs recognized in inventory should be expensed in the year by assigning costs to the cost of goods sold based on the order in which inventory items were purchased.

What Is the Purpose of Using a "Cost Allocation System