If changes occur in the purchase price of the manufacturing inputs from one period to the next, then the FIFO costing method produces a more accurate unit cost than does the weighted average costing method.

Question

Quizplus · Accepted Answer

This is because the FIFO method uses the cost of the oldest units in stock to calculate the cost of goods sold, while the weighted average method uses the average cost of all units in stock. If the price of inputs increases over time, the FIFO method will assign the lowest cost units to cost of goods sold first, resulting in a higher accuracy of unit cost calculation.

If Changes Occur in the Purchase Price of the Manufacturing