Question

Which method of calculating inventory cost allows a business to store

inventory without indicating which batch it belongs to?
A. weighted average method
B. last in, first out (LIFO)
C. first in, first out (FIFO)
D. weighted average sales price method

Answer 1

The method of calculating inventory cost that allows a business to store inventory without indicating which batch it belongs to is the weighted average method.

Step-by-step explanation:

The method of calculating inventory cost that allows a business to store inventory without indicating which batch it belongs to is the weighted average method.

Under this method, the average cost of all units in inventory is calculated and used to assign a cost per unit.

This cost per unit is then multiplied by the number of units sold or remaining in inventory to determine the total value of the inventory.

For example, if a business purchases inventory at different costs and quantities, the weighted average method takes into account the quantity and cost of each batch in calculating the average cost per unit.