Final answer:
The three inventory costing methods are FIFO, LIFO, and weighted average.
Step-by-step explanation:
Three Inventory Costing Methods:
The three inventory costing methods are FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average.
FIFO assumes that the oldest inventory items are sold first, while the newest items remain in inventory. This method is like a queue in which the first items that enter the inventory are the first to be sold.
LIFO assumes that the newest inventory items are sold first, while the oldest items remain in inventory. This method is like a stack in which the last items that enter the inventory are the first to be sold.
Weighted Average calculates the average cost of all units in inventory and assigns that average cost to each unit sold. This method is useful when inventory items are considered identical and their individual costs are not tracked.