A Merchandiser Does Not Need to Calculate Cost Per Unit

question 25

True/False

A merchandiser does not need to calculate cost per unit because it resells goods that are already manufactured.

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Definitions:

First-In, First-Out Method

An accounting method for valuing inventory where the oldest items are sold or used first.

Equivalent Units

A concept in process costing that converts partially completed units into a number of equivalent full units for the purpose of cost assignment.

Weighted-Average Method

An inventory valuation technique that calculates the cost of inventory by taking the average cost of all similar items present in the inventory.

First-In, First-Out Method

An inventory valuation method whereby the oldest inventory items are recorded as sold first, thus the cost of items purchased first is charged against revenue earlier.