respond to "I would prefer the First in First out method. This allows for a more accurate reflection of costs as older inventory is the first sold and current revenue is able to match with the older lower costs of goods. Also working in the medical warehouse, it is important to keep track of perishable goods and lot numbers in case we receive a bad batch of product the tainted lot and can removed. This method can have issues for instance if you purchase a product at 10 dollars each but the next shipment can be bought at 7 dollars each as the market is declining. if you are averaging out the inventory it works out to 8.5 per unit but in FIFO you remain at the 10 and 7 per unit