The computation of equivalent units under the FIFO method:
A)treats units in the beginning work in process inventory as if they were started and completed during the current period.
B)treats units in the beginning work in process inventory as if they represent a separate batch of goods separate and distinct from goods started and completed during the current period.
C)treats units in the ending work in process inventory as if they were started and completed during the current period.
D)ignores units in the beginning and ending work in process inventories.

Question

Quizplus · Accepted Answer

The FIFO method assumes that units in the beginning work in process inventory are completed first, and then units started and completed during the current period. Therefore, they are treated as a separate batch of goods and equivalent units are calculated accordingly. Units in ending work in process inventory are treated as part of the current batch of goods and their equivalent units are calculated separately.

The Computation of Equivalent Units Under the FIFO Method