The FIFO method separates beginning inventory and current production to compute cost per unit of production.

Question

Quizplus · Accepted Answer

The FIFO method assumes that the oldest goods are sold first, and the cost of those goods becomes the cost of goods sold. The remaining inventory is then made up of the newest goods, which are assumed to have the current cost of production. Therefore, the FIFO method separates beginning inventory and current production to compute cost per unit of production.

The FIFO Method Separates Beginning Inventory and Current Production to Compute