ECONOMICS

Detailed explanation-1: -Abnormal Loss: If the units lost in the production process are more than the normal loss, the difference between the two is the abnormal loss. It is excluded from total cost due to which it does not affect the cost per unit of the product.

Detailed explanation-2: -The first-in-first-out (FIFO) method keeps beginning inventory costs separate from current period costs and assumes that beginning inventory units are completed and transferred out before the units started during the current period are completed and transferred out.

Detailed explanation-3: -Equivalent Units of Production Under the FIFO method, we will calculate equivalent units for 3 things: Units completed from beginning work in process, units started and completed this period and units remaining in ending work in process.

Detailed explanation-4: -Equivalent units of production are equal to: b. number of units worked on during the period by a production department. Equivalent units are the estimated number of units worked on during the period. They are computed by multiplying the physical units by the percentage worked on during the period.