Asked by Denver Osborn on Apr 26, 2024

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An advantage of the weighted-average method is that:

A) it assigns an equal cost to each unit so net income does not fluctuate as much as with other methods.
B) it takes into account the number of units purchased at each amount, not a simple average cost.
C) it matches current selling prices and current costs.
D) Both A and B are correct.

Weighted-Average Method

Valuing of inventory where each item is assigned the same unit cost. This unit cost is found by dividing the cost of goods available for sale by the total number of units for sale.

  • Examine the benefits and drawbacks of various inventory valuation approaches.
  • Comprehend the variance and application of FIFO, LIFO, weighted-average, and specific invoice approaches for valuing inventory.
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SR
Steven RickettsApr 30, 2024
Final Answer :
D
Explanation :
The weighted-average method assigns a cost to each unit based on the average cost of all units available for sale during the period, taking into account the number of units purchased at each amount (not just a simple average). This method smooths out price fluctuations over the period, leading to less fluctuation in net income compared to methods that might assign costs based solely on the most recent purchase prices.