Average method of pricing the material issues is useful when ___________.

A. material prices are rising

B. material prices are falling

C. material prices are constant

D. material prices are fluctuating

Answer: Option D

Solution(By Examveda Team)

Average method of pricing the material issues is useful when material prices are fluctuating. Under the 'Average Cost Method', it is assumed that the cost of inventory is based on the average cost of the goods available for sale during the period. The average cost is computed by dividing the total cost of goods available for sale by the total units available for sale.