Because the weighted average and FIFO methods treat beginning inventory differently, if a firm has beginning inventory in a process costing system and the FIFO method is used, it will:
A) Always have a higher cost per equivalent unit than the weighted average method for materials
B) Always have a lower cost per equivalent unit than the weighted average method for conversion costs
C) Always have a higher number of equivalent units of production for conversion costs than weighted the average method
D) Always have a lower number of equivalent units of production for conversion costs than the weighted average method

Question

Quizplus · Accepted Answer

The FIFO method calculates equivalent units based only on current period production, excluding beginning inventory, leading to fewer equivalent units compared to the weighted average method, which includes beginning inventory.

Because the Weighted Average and FIFO Methods Treat Beginning Inventory