When the average-cost method is applied to a perpetual inventory system,a moving average cost per unit is computed with each purchase.

Question

Quizplus · Accepted Answer

The average-cost method in a perpetual inventory system uses a moving average cost, which means that with each purchase, a new average cost per unit is calculated. This is different from the periodic inventory system, where the average cost is only calculated at the end of the accounting period.

When the Average-Cost Method Is Applied to a Perpetual Inventory