Student reply::There are three inventory cost flow assumptions.

$1.$ First in first out $($FIFO$)$: This cost flow assumption tracks inventory costs assuming that the first unit purchased will be the first sold. For example, if you buy $10$ units at $$1$ each and $10$ units at $$2$ each and you sell $15$ units, this method assumes the $$1$ units sold first. Cost of goods sold would be $$20(10$ @ $$1=$ $$10+5$ @ $$2=10$ total $=$ $$20).$ Assuming that the price of goods rises, this would give you the lowest cost of goods sold and the highest inventory reported.

$2.$ Last in first out $($LIFO$)$: This assumption tracks inventory costs assuming that the latest units sold will be the first to sell. Using my above example cost of goods sold would be $$25(10$ @ $$2=$ $$20+5$ @ $$1=$ $$5$ total $=$ $$25).$ Assuming the price of goods rises, this would give you the highest cost of goods sold and the lowest inventory reported.

$3.$ Weighted Average: This assumption tracks inventory by assigning an average cost to the inventory sold. Using my above example, the cost of goods sold would be $$22\mathrm{.}50($average of the two costs is $$1\mathrm{.}50$ x $15$ sold $=$ $$22\mathrm{.}50)$

Here is requirement: Respond to other students initial posts. Your response should expand upon the information that was included in the students initial posts. $($Simply agreeing with a students initial post will not count as a response$).$