Advantages of the LIFO method and Disadvantages

Cost/Management Accounting notes

Product costs tend to be based on current market prices thus the method is realistic. Managers are continually aware of the recent costs when making decisions because the cost being charged to the department or products will be the current costs
The LIFO method involves tedious calculations if the prices of materials fluctuate from time to time.
Comparison of one job with another may be unfair and difficult. Variation in prices may make the decision-making process difficult and unfair. This is because LIFO method is often the opposite of what is happening in reality (stocks are valued at the oldest prices) and thus becomes difficult to explain to managers.

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