The actual physical flow of production will depend on the cost allocation method,such as the FIFO costing method or the average costing method,chosen by the company.

Question

Quizplus · Accepted Answer

The actual physical flow of production is determined by the production process itself, not by the cost allocation method chosen for accounting purposes. Cost allocation methods like FIFO (First-In, First-Out) or average costing are used for financial reporting and inventory valuation, not for dictating the physical flow of production.

The Actual Physical Flow of Production Will Depend on the Cost