A method of valuing inventory based on the average of units is called the:

Question

Quizplus · Accepted Answer

The method described in the question is the average cost method, where the cost of goods sold and ending inventory are valued based on the average cost of all units. This method is often used by businesses with many units of inventory that have similar costs. LIFO and FIFO are alternative methods of valuing inventory based on the assumption of how costs are incurred or consumed, and the specific cost method involves valuing inventory based on the cost of each individual unit. However, neither of these methods involve taking the average cost of all units.

A Method of Valuing Inventory Based on the Average of Units