An inventory cost flow method must be used under both a perpetual and a periodic inventory system is not considered an advantage of using the retail method of inventory costing .
An advantage of retail inventory method
It does not require a physical inventory , the method only requires an organization to record the retail prices of inventory items . It allows the organization to create an inventory value report for budgeting or preparation of financial statements.
Retail inventory method
Provides an organization with a comprehensive account of available items and the monetary value of these inventory items . It evaluates the ending inventory or cost of goods sold for the organization . It requires organization to consider factors such as discounts, sales, markup, and loss of inventory .
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