Because the cost of specific inventory items is not usually practical to determine,it is necessary for management to select a cost flow assumption.

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Determining the cost of specific inventory items can be complex and time-consuming, so management often uses cost flow assumptions to simplify the process. These assumptions help allocate costs to inventory items and ensure that the cost of goods sold is calculated correctly. Examples of cost flow assumptions include FIFO (first in, first out), LIFO (last in, first out), and weighted average cost.

Because the Cost of Specific Inventory Items Is Not Usually