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SA, a food processing company, decides to change the inventory cost estimation technique from weighted average to FIFO (first-in, first-out) basis in order to better
SA, a food processing company, decides to change the inventory cost estimation technique from weighted average to FIFO (first-in, first-out) basis in order to better represent how inventory is consumed in the business. The cost of inventory on a weighted average basis is G$6,890 whilst on a FIFO basis it is G$7,900. Which three of the following statements correctly explain the effect of the change in inventory cost estimation technique? Solution A.FIFO gives a higher cost than weighted average because prices are falling. B.FIFO gives a higher cost than weighted average because prices are rising. C.FIFO will result in a higher profit for the current year than weighted average. D.FIFO will result in a lower profit for the current year than weighted average. E.FIFO will result in higher current assets at the year-end than weighted average
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