Chapter 2 – Understand the Costing Method

There are several possible inventory costing methods, which are:

a) first in first out method (FIFO)
     – first goods purchased are also the first goods sold.

b) last in first out method (LIFO)
     – last item of inventory purchased is the first one sold.

c) weighted average method.
     – valuing both inventory and the cost of goods sold based on the average cost of all materials bought during the period.