Week 3 Discussion 2.docx - The four methods used to...

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The four methods used to determine merchandise inventory costs are: Specific Identification method, First-in First-out (FIFO), Last-in First-out (LIFO), and the Weighted Average Cost method. Each one of these methods approximates the flow of inventory costs except for the specific identification method and they are used to determine the amount of cost of goods and ending merchandise inventory (Miller-Nobles, Mattison, Matsumura, 2018). Specific identification method is an inventory costing method based on the specific costs of each unit. This method is used when a company wants to know exactly which item was sold and the cost, usually for businesses that sell unique items. Purchases Date Quantity Unit Cost ea. Total Cost June 1 2 Units $150 $300 June 3 4 Units $500 $2,000 June 9 10 Units $100 $1,000 First-in First-out (FIFO) is the first costs into inventory are the first costs out to costs of goods sold and the inventory is based on the most recent purchases. For example, if the business purchases 10 units at $100 on June 1 st

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