Which of the following methods of inventory valuation is a compromise between the last-in, first-out (LIFO) method and the first-in, first-out (FIFO) method for both the amount of the ending inventory and the cost of goods sold?
A) The weighted-average-cost method
B) The standard-average-cost method
C) The fixed cost method
D) The variable cost method

Question

Quizplus · Accepted Answer

The weighted-average-cost method takes an average of all the units in inventory, regardless of when they were purchased or produced, to determine the cost of goods sold and the value of the ending inventory. This method is a compromise between LIFO and FIFO because it takes into account all units available for sale during the period.

Which of the Following Methods of Inventory Valuation Is a Compromise