When units are purchased at different costs over time, it is simple to determine the cost per unit assigned to inventory.

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When units are purchased at different costs over time, it becomes complex to determine the cost per unit assigned to inventory. This is because the cost of inventory not only includes the cost of the product but also the cost of transportation, handling, storage, etc. Therefore, a cost flow assumption such as FIFO or LIFO is used to determine the cost per unit assigned to inventory.

When Units Are Purchased at Different Costs Over Time, It