A company may use more than one inventory cost formula if it has different types of inventory.

Question

Quizplus · Accepted Answer

Different types of inventory can have different characteristics and business rationales for using specific inventory cost formulas (e.g., FIFO, LIFO, weighted average). Accounting standards allow for this flexibility as long as the method chosen is consistently applied to each type of inventory and it reflects the actual cost flow.

A Company May Use More Than One Inventory Cost Formula