Which of the following is NOT true of the average costing method? A. It does not

Question

Which of the following is NOT true of the average costing method? A. It does not consider demand B. It can be inaccurate, so it should not be used C. It is easy to estimate D. It demonstrates a relationship between unit cost and sales forecast Which of the following is NOT true of the average costing method? A. It does not consider demand B. It can be inaccurate, so it should not be used C. It is easy to estimate D. It demonstrates a relationship between unit cost and sales forecast A. It does not consider demand B. It can be inaccurate, so it should not be used C. It is easy to estimate D. It demonstrates a relationship between unit cost and sales forecast

Explanation / Answer

B option is not true in the matter of average costing method and it is accurate and frequently in use.

The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale. This gives a weighted-average unit cost that is applied to the units in the ending inventory. Average costing method can also be used to determine the average amount invested in each of a group of securities. Doing so avoids the larger amount of work required to track the cost of each individual security.

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