Barret Cameron, a student in Professor Wagner’s managerial accounting course, asked the following question. “In the first accounting course, the teacher said inventory costs flow on a FIFO, LIFO, or weighted average pattern. Now you are telling us inventory costs flow through raw materials, to work in process, and then to finished goods. Is this manufacturing stuff a new cost flow method or what?”
Required
Assume that you are Professor Wagner. Write a brief memo responding to Mr. Cameron’s question.