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# Inventory costing comes in many different sizes. LIFO, FIFO

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Inventory costing comes in many different sizes. LIFO, FIFO, weighted average, and moving average are just some of the methods under US GAAP.

Why do you think there are so many methods available under US GAPP (other than to keep accountants employed) and why would a company prefer one over the other?

#### Solution Preview

Inventory costing comes in many different sizes. LIFO, FIFO, weighted average, and moving average are just some of the methods under US GAAP.

Why do you think there are so many methods available under US GAPP (other than to keep accountants employed) and why would a company prefer one over the other?

Solution:

It really depends on the type of company, as to which system they will decide to use. Depending on the type of inventory costing system used, it will affect the balances of the ...

#### Solution Summary

Inventory costing comes in many different sizes. LIFO, FIFO, weighted average, and moving average are just some of the methods under US GAAP.

Why do you think there are so many methods available under US GAPP (other than to keep accountants employed) and why would a company prefer one over the other?

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## Case - Which method shall we use? LIFO FIFO

The White Wove Corporation began operations in 2011. A summary of the firs quarter appears below:

Purchases:
January 2...............250 units...............\$23,250

February 11............100 units...............\$9,500

February 20.............400 units.........\$38,400

March 21................200 units..............\$19,600

March 27..................225 units..................\$22,275

Other data:

January.....................200 sales in units sales price per unit \$140 operating expenses \$9,575

February.............225 sales in units sales price per unit \$142 operating expenses \$7,820

March.................350 sales in units sales price per unit \$145 operating expenses \$7,905

The White Wove Corporation used the FIFO perpetual inventory method and correctly computed an inventory value of \$38,300 at the end of the first quarter.
Management is considering changing to a FIFO costing method.

It has also considered using a periodic system instead of the perpetual system presently being used.

You have been hired to assist management in making the decision.