The more prices change, the greater the difference between the costs assigned to units transferred out using weighted-average costing and the costs assigned to units transferred out using first-in, first-out (FIFO).

Question

Quizplus · Accepted Answer

When prices fluctuate, FIFO assigns costs based on older prices, while weighted-average costing averages all costs, leading to greater differences in cost assignments.

The More Prices Change, the Greater the Difference Between the Costs