Quiz 3: Impact of Different Inventory Costing Methods

FIFO

Teaching Emphasis:

Earlier costs are generally assigned to goods sold first.

Audit procedure:

Inspect purchase layers and recalculate inventory costs.

Weighted-average cost

Teaching Emphasis:

Costs are averaged across eligible inventory quantities.

Audit Procedure:

Recalculate the weighted-average cost.

Standard Costing

Teaching emphasis:

Standard costs are approximate actual costs when appropriately maintained.

Audit Procedure:

Test standard costs, variances, and periodic updates.

Specific Identification

Teaching Emphasis:

Actual costs are assigned to identified items.

Audit Procedure:

Trace selected items to job-specific or serial-number cost records.