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If a business has substantial amounts of manufactured inventory, both the
first-in-first-out (FIFO)method and the weighted-average method will be very useful in assessing cost control.
First-In-First-Out (FIFO)
An inventory valuation method where the first items produced or acquired are the first to be sold or used, reflecting the chronological flow of goods.
Weighted-Average Method
An inventory costing method that assigns a weighted average cost to each unit in inventory, used in both periodic and perpetual inventory systems.
Cost Control
The practice of managing and reducing business expenses through efficient operations and spending.
- Discern the differences in tracking costs between FIFO and the weighted-average strategies in process costing.
- Review the approach to calculating equivalent units for materials and conversion costs in a range of costing methods.
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Learning Objectives
- Discern the differences in tracking costs between FIFO and the weighted-average strategies in process costing.
- Review the approach to calculating equivalent units for materials and conversion costs in a range of costing methods.
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