The FIFO method is a more accurate method than weighted average because:

A) it does not require the calculation of equivalent units.
B) the costs of current period are not combined with the costs of the prior period.
C) it considers prior period costs during the current period.
D) it must be computerised in order to obtain accurate calculations.

Question

Sebastian-Andres Castillo · Accepted Answer

Final Answer : B, Explanation :  The FIFO method assumes that the costs of the units sold are the costs of the oldest units in inventory, which means that the costs of the current period are not combined with the costs of the prior period. This results in a more accurate method of cost accounting compared to weighted average, which averages the costs of the current and prior periods. The other options are incorrect; A is incorrect because FIFO still requires equivalent unit calculations, C is incorrect because it assumes current period costs are the same as prior period costs, and D is incorrect because FIFO can be calculated manually without the need for computerisation.

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