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Hi, my question is what’s the difference between “Cost measurement techniques” like: Standard cost method and Retail method and “Cost Formulas” like: FIFO, AVCO.
Thanks!Standard costing and retail method are ways of valuing inventory when we can identify each individual unit.
FIFO etc are not ‘formulas’ but are different assumptions we can choose to make then it is not possible to identify exactly when each unit of inventory was purchased.
Have you watched my free lectures on inventory? The lectures cover everything needed for the exam.
Thank you sir for giving me your precious time!
Sir, I have watched all of you lectures on inventories and have covered everything required for the exam but could you please further elaborate on “When we can identify each individual unit”.
Thanks Again!
Suppose you have been buying units all year and the cost of units kept changing. At the end of the year you have 20 units left. If you can identify how much each individual unit cost when you bought it then use that. However usually you cannot identify for each unit because they all look the same, so we use an assumption such as FIFO.
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