Question

What is the difference between FIFO method and Average Cost method?

Answer 1

The FIFO method and average cost of method are used to calculate Ending inventory and cost of good sold.

The weighted average cost method uses average of costs of goods to assign costs. It is calculated Total cost of inventory available for sale divided by total number of units available for sale.
The FIFO (First in first out) method uses the inventory available for sale bought first, that mean inventory purchased first will be sold out first.
The cost of ending inventory under average method will be between the LIFO and FIFO cost levels.