The equivalent units of production for a department using the FIFO process costing method is equal to the number of units completed plus the equivalent units in the ending inventory less the equivalent units in the beginning inventory.

Question

Quizplus · Accepted Answer

This is correct according to the FIFO process costing method. The units that are completed are considered as fully completed and the ending inventory is based on the work that was started but not completed. Therefore, the equivalent units in ending inventory must be added to the completed units to get the overall equivalent units of production. Meanwhile, the equivalent units in the beginning inventory are subtracted as they were included in the previous period's calculation.

The Equivalent Units of Production for a Department Using the FIFO