As companies move towards long-run procurement contracts that reduce differences in unit costs from period to period and reduce inventory levels,the difference in cost of units completed under the weighted-average and FIFO methods will increase.

Question

Quizplus · Accepted Answer

Long-run procurement contracts that stabilize unit costs and reduce inventory levels make the cost of units more uniform across periods, thereby reducing the difference in cost of units completed under the weighted-average and FIFO methods.

As Companies Move Towards Long-Run Procurement Contracts That Reduce Differences