The allocation of the cost of goods available for sale during a reporting period involves the flow of costs rather than the flow of units.

Question

Quizplus · Accepted Answer

The cost of goods available for sale includes both the cost of goods sold and the cost of ending inventory. Allocating the cost involves assigning the cost to the units sold and units remaining in inventory, not the other way around. Therefore, the flow of costs is more important than the flow of units.

The Allocation of the Cost of Goods Available for Sale