The first-in,first-out (FIFO)method creates better month-to-month cost comparisons than the weighted-average method ________.
A) because it does not recognize transferred in units from other processes
B) when there are substantial quantities of units in process at the end of the period
C) because it merges costs from the prior period with the current period
D) because it is used by industries that do not experience significant cost changes

Question

Quizplus · Accepted Answer

The FIFO method provides better cost comparisons when there are substantial quantities of units in process at the end of the period because it separates costs of current period production from costs of prior period production, allowing for clearer analysis of current period costs.

The First-In,first-Out (FIFO)method Creates Better Month-To-Month Cost Comparisons Than the Weighted-Average