Final answer:
The allocation between Cost of Goods Sold (COGS), Work in Progress (WIP), and Finished Goods is typically based on their relative sizes. One common method of allocation is based on the ratio of COGS, WIP, and Finished Goods. Other methods, such as using the difference or the sum of their sizes, or calculating the average, may also be used depending on the specific circumstances and requirements of the business.
Step-by-step explanation:
The allocation between Cost of Goods Sold (COGS), Work in Progress (WIP), and Finished Goods is typically based on their relative sizes.
One common method of allocation is based on the ratio of COGS, WIP, and Finished Goods. This means that the amount allocated to each category is proportional to their respective sizes. For example, if COGS accounts for 40% of the total value, WIP accounts for 30%, and Finished Goods accounts for 30%, then the allocation would be done accordingly.
Other methods, such as using the difference or the sum of their sizes, or calculating the average, may also be used depending on the specific circumstances and requirements of the business.