Under the FIFO method, all spoilage costs are assumed to be related to the units ________.
A) in beginning inventory, plus the units completed during the period
B) completed during the period, using the unit costs of that period
C) in ending inventory
D) in both beginning and ending inventory plus the units completed during the period

Question

Quizplus · Accepted Answer

FIFO (First-in-First-Out) assumes that the cost of goods sold and the cost of units in ending inventory are based on the cost of the earliest units purchased or produced during the period. Therefore, all spoilage costs are assumed to be related to the units completed during the period, using the unit costs of that period. Cost related to the beginning inventory or the ending inventory is not considered.

Under the FIFO Method, All Spoilage Costs Are Assumed to Be