Difference between the FIFO and weighted average method of Inventory?
The first-in, first-out method assumes that the items of inventory that were purchased or produced first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced.
Under the weighted average cost method the cost of each item is determined from the weighted average of the cost of similar items at the beginning of the period and the cost of similar items purchased or produced during that period. The average may be calculated on a period basis, or as each additional shipment is received, depending upon the circumstances of the entity.
