Unit cost of materials for a department using the FIFO method of process costing is found by taking the total cost of materials issued to the department during the year divided by
A)units in process.
B)units started and completed.
C)total units manufactured.
D)equivalent units manufactured.

Question

Quizplus · Accepted Answer

In the FIFO method of process costing, the equivalent units manufactured are used to determine the unit cost of materials for a department. This is because the FIFO method assumes that the first units in are the first units out, which means that the costs of the materials used will be based on the units that have been completed and transferred out of the department, as well as the units that are still in process. Therefore, the unit cost of materials is found by taking the total cost of materials issued to the department during the year divided by the equivalent units manufactured.

Unit Cost of Materials for a Department Using the FIFO