Retail Inventory Method:
An advantage of the retail inventory method is that it does not require a physical inventory. The retail inventory method only requires an organization to record the retail prices of inventory items. If an organization has multiple locations in different cities and states, performing a physical inventory can become a costly and time-consuming undertaking. By using retail inventory, an organization can prepare an inventory for a centralized location. The retail inventory method also allows the organization to create an inventory value report for budgeting or the preparation of financial statements.
Labor costs are easier to monitor and control through cost accounting. Depending on the nature of the business, wage expenses can be taken from orders, jobs, contracts, or departments and subdepartments. This means management can pick and choose how it determines efficiency and productivity. This is very important when estimating marginal productivity of individual employees.
Read more: What are the main advantages and disadvantages to the cost accounting method? | Investopedia
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