A new average cost is calculated after each purchase when a business is using which of the following methods?

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Quizplus · Accepted Answer

The average-cost method calculates a new average cost after each purchase by dividing the total cost of the inventory by the total number of units. This method is used to smooth out fluctuations in inventory costs and is simpler than specific-unit-cost or last-in, first-out methods. First-in, first-out is another method of inventory costing but it does not calculate a new average cost after each purchase.

A New Average Cost Is Calculated After Each Purchase When