(Appendix 4A)If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system,then which of the following statements is reasonable to assume?
A) There was no beginning work-in-process inventory.
B) Processing centres are arranged in a sequential pattern.
C) The FIFO cost method is being used.
D) The weighted-average cost method is being used.

Question

Quizplus · Accepted Answer

When a company uses two different unit cost figures for transfers, it indicates that the FIFO cost method is being used, as FIFO distinguishes between costs of beginning inventory and costs of current period production.

(Appendix 4A)If a Company Uses Two Different Unit Cost Figures