COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -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-2: -What is FIFO costing? In simplest terms, FIFO (first-in, first-out) costing allows you to track the cost of an item/SKU based on its cost at purchase order receipt, and apply this cost against each shipment of the item until the receipt quantity is exhausted.
Detailed explanation-3: -Equivalent units for a process costing system using the FIFO method would be equal to: a. units completed during the period, plus equivalent units in the ending work in process inventory.