COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Treatment of inventory at the end of the period.
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Treatment of inventory at the beginning of the period.
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Journal account used.
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Detailed explanation-1: -the FIFO method keeps these units, and their cost separate, while the weighted-average method adds the units and the cost to the units started and completed.
Detailed explanation-2: -The key difference between FIFO and weighted average is that FIFO is an inventory valuation method where the first purchased goods are sold first whereas weighted average method uses the average inventory levels to calculate inventory value.
Detailed explanation-3: -The correct answer is a. If there is no beginning work in process inventory, both methods would result the same equivalent units.
Detailed explanation-4: -The key difference between weighted-average and FIFO process costing methods is the handling of the partially completed: Beginning work-in-process inventory.
Detailed explanation-5: -Equivalent Units of Production = Units transferred out + Equivalent units in ending work in process inventory − Equivalent units in beginning inventory.