Inventory valuation tends to have complexity for manufacturing and merchandising companies because of cost flow assumptions.

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Inventory valuation for manufacturing and merchandising companies involve cost flow assumptions such as first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average cost method. These assumptions can make it complex to determine the true value of inventory on hand, especially when prices are changing, and there are different batches of inventory.

Inventory Valuation Tends to Have Complexity for Manufacturing and Merchandising