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📦Inventory Costing Methods

FIFO (First-In, First-Out)

Oldest costs → COGS | Newest costs → Ending Inventory

What It Means

Sell old stuff first. When prices rise: Lowest COGS, Highest Net Income.

✓Better for: Financial statement presentation (inventory reflects current costs)

Related Formulas

LIFO (Last-In, First-Out)

Newest costs → COGS | Oldest costs → Ending Inventory

Weighted Average Cost

Cost of Goods Available for Sale ÷ Units Available for Sale = Weighted Average Cost per Unit

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