Under the average cost method, the beginning inventory amount for each cost element is added to the amount of that cost element incurred during the current period.

Question

Quizplus · Accepted Answer

The average cost method calculates the cost of ending inventory and cost of goods sold by adding the beginning inventory cost to the cost of purchases during the period, then dividing by the total number of units available for sale to find the average cost per unit.

Under the Average Cost Method, the Beginning Inventory Amount for Each