The inventory costing method affects the process of preparing the cost of goods sold budget.

Question

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The inventory costing method determines how the cost of goods sold is calculated, which in turn affects the process of preparing the cost of goods sold budget. Different inventory costing methods, such as FIFO, LIFO, and average cost, result in different costs of goods sold and therefore different budgeted amounts.

The Inventory Costing Method Affects the Process of Preparing the Cost