The advantage of the weighted-average method is that: a. an equal cost is assigned to each unit,...

Question:

The advantage of the weighted-average method is that:

a. an equal cost is assigned to each unit, so net income doesn't fluctuate as much as with other methods.

b. the flow of goods and flow of costs are the same.

c. it matches current selling prices and current costs.

d. old costs are matched against current income.

What Is The Weighted-Average Inventory Costing Method:

The Weighted-Average Inventory Costing Method is one of the manners to account for inventory under both GAAP and IFRS. The method involves determining the average cost of goods on hand at the time of sale in order to record the cost of goods sold.

Answer and Explanation:

The correct answer is a. an equal cost is assigned to each unit, so net income doesn't fluctuate as much as with other methods.

  • This is especially useful when a company's cost of goods purchased changes with high volatility within a reporting period.

Learn more about this topic:

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Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average

from Accounting 101: Financial Accounting

Chapter 6 / Lesson 11
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