If a business operates in an industry that does not experience significant cost changes, should the business prepare its production cost report using the FIFO method or the weighted-average method?
Explain your answer.
The business should use the weighted-average method. This method merges costs from the prior period with the current period. This creates a smoothing effect. The weighted-average method is easier to use, and the additional benefit derived from more detailed calculations would not outweigh the cost of obtaining them.
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