Question 1

From the standpoint of cost control,the FIFO method of process costing is superior to the weighted-average method.

Accepted Answer

The FIFO method of process costing assumes that the first units processed are the first units sold, and therefore assigns the oldest costs to the units sold first. This method can be beneficial for cost control as it reflects the actual order in which the units were produced and assigns costs accordingly. In contrast, the weighted-average method blends together all of the production costs for a given period and divides them by the total number of units produced, which may not accurately reflect the actual costs for each unit, and may make it more difficult to identify specific cost issues.

Question 2

The cost per equivalent unit for conversion costs will always be the same under both the FIFO and the weighted-average methods if there is no beginning work in process inventory.

Accepted Answer

When there is no beginning work in process inventory, both the FIFO and weighted-average methods will allocate conversion costs based on the same amount of work completed during the period. Therefore, the cost per equivalent unit for conversion costs will be the same under both methods.

Question 3

Under the FIFO method,in addition to the cost of units started and completed during the period,the cost of the units transferred out of the department includes:

Accepted Answer

A

Question 4

Gaba Corporation uses the FIFO method in its process costing system.The Grinding Department started the month with 17,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs.An additional 60,000 units were transferred in from the prior department during the month to begin processing in the Grinding Department.During the month 70,000 units were completed in the Grinding Department and transferred to the next processing department.There were 7,000 units in the ending work in process inventory of the Grinding Department that were 10% complete with respect to conversion costs. What were the equivalent units of production for conversion costs in the Grinding Department for the month?
A) 70,700
B) 60,500
C) 50,000
D) 70,000

Accepted Answer

FIFO method
Units started and completed during the period = Units started into production during the period - Units in ending work in process inventory = 60,000 - 7,000 = 53,000
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Question 5

In the cost reconciliation report under the FIFO method,the costs accounted for equals the cost of units transferred out plus the costs added during the period.

Accepted Answer

In the cost reconciliation report under the FIFO method, the costs accounted for equal the cost of the beginning work in process plus the costs added during the period. The cost of units transferred out and the ending work in process are then derived from these accounted costs.

Question 6

All production costs have been steadily rising in the Donner Company for several periods.The company maintains large work in process inventories.Donner Company's cost per equivalent unit computed using the FIFO method would be:
A) the same as that computed under the weighted-average method.
B) higher than that computed under the weighted-average method.
C) lower than that computed under the weighted-average method.
D) could be lower than, the same as, or higher than that computed under the weighted-average method.

Accepted Answer

The FIFO (First-In, First-Out) method would result in a higher cost per equivalent unit than the weighted-average method in this scenario because FIFO considers the costs of the most recent units added to the inventory. Since production costs have been steadily rising, the costs assigned to units under FIFO would be based on these higher recent costs, whereas the weighted-average method would blend older, lower costs with the newer, higher costs, resulting in a lower average cost per unit.

Question 7

The equivalent units in the ending work in process inventory will be different under the FIFO and the weighted-average methods of process costing.

Accepted Answer

The answer of The equivalent units in the ending work...

Question 8

Onyemah Corporation uses the FIFO method in its process costing system.Operating data for the Brazing Department for the month of November appear below:
 What were the equivalent units of production for conversion costs in the Brazing Department for November?
A) 42,040
B) 39,120
C) 35,600
D) 39,400

Accepted Answer

FIFO method
Units started and completed during the period = Units started into production during the period - Units in ending work in process inventory = 37,500 - 9,200 = 28,300
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Question 9

In the cost reconciliation report under the FIFO method,the costs to be accounted for equals the cost of ending work in process inventory plus the costs added during the period.

Accepted Answer

In the cost reconciliation report under the FIFO method, the costs to be accounted for equal the cost of beginning work in process inventory plus the costs added during the period. The cost of ending work in process inventory is part of the costs accounted for, not added to the costs added during the period.

Question 10

Salmont Corporation uses the FIFO method in its process costing system.The company reported 30,800 equivalent units of production for materials last month.The company's beginning work in process inventory consisted of 8,000 units,75% complete with respect to materials.The ending work in process inventory consisted of 6,000 units,80% complete with respect to materials.The number of units started during the month was:
A) 32,000 units
B) 24,000 units
C) 6,800 units
D) 30,000 units

Accepted Answer

FIFO method
FIFO method equivalent units of production
 11ea7761_18bd_17ba_81a5_937affc0cb2b_TB2580_00 2,000 + X + 4,800 = 30,800
X = 30,800 - 2,000 - 4,800 = 24,000
Units started and completed = Units started into production during the period - Units in ending inventory
24,000 = Units started into production during the period - 6,000
Units started into production during the period = 24,000 + 6,000 = 30,000

Question 11

Any difference in the equivalent units calculated under the weighted-average and the FIFO methods is due to the units in the ending work in process inventory.

Accepted Answer

The difference in equivalent units between the weighted-average and FIFO methods is primarily due to how each method treats the units in the beginning work in process inventory, not the ending work in process inventory. The weighted-average method combines the beginning inventory and current period work, while FIFO focuses only on the current period's work.

Question 12

Intask Corporation uses the FIFO method in its process costing system.Beginning inventory in the mixing department consisted of 6,000 units that were 75% complete with respect to conversion costs.Ending work in process inventory consisted of 5,000 units that were 60% complete with respect to conversion costs.If 12,000 units were transferred to the next processing department during the period,the equivalent units of production for conversion cost would be:
A) 12,500 units
B) 10,500 units
C) 13,500 units
D) 13,000 units

Accepted Answer

FIFO method
Units started and completed during the period = Units completed during the period - Units in beginning work in process inventory = 12,000 - 6,000 = 6,000
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Question 13

When comparing the two process costing methods for the same company,equivalent units computed under the FIFO method will always be less than or equal to equivalent units computed under the weighted-average method.

Accepted Answer

Under the FIFO method, only work done on units in the current period is considered, whereas the weighted-average method averages the work done across both current and prior periods, potentially leading to a higher equivalent unit count.

Question 14

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.

Accepted Answer

The equivalent units of production for a department using the FIFO process costing method is calculated by adjusting for the units and work that were in process at the beginning of the period, focusing only on the work done during the current period. It does not simply add the units completed to the equivalent units in the ending inventory.

Question 15

Equivalent units of production for a process costing system using the FIFO method are equal to:
A) Units completed during the period + Equivalent units in the ending work in process inventory.
B) Units transferred out + Equivalent units in ending work in process inventory + Equivalent units in beginning work in process inventory.
C) Units started and completed during the period + Equivalent units in the ending work in process inventory.
D) Units completed during the period and transferred out.

Accepted Answer

The FIFO method assumes that units in the beginning work in process inventory are completed before those started during the current period, so the equivalent units in the beginning work in process inventory are added to the units transferred out and the equivalent units in the ending work in process inventory to get the total equivalent units of production.

Question 16

Under the FIFO method of product costing,equivalent units of production consider units in the beginning inventory as if they were started and completed during the current period.

Accepted Answer

Under the FIFO method, units in the beginning inventory are not considered as if they were started and completed during the current period. Instead, they are typically assumed to have been completed in a prior period and therefore do not require any additional production costs in the current period. Equivalent units of production are only calculated for units that were started and partially or fully completed during the current period.

Question 17

Under the FIFO method,the cost per equivalent unit equals:
A) Cost of beginning work in process inventory ÷ Equivalent units of production.
B) (Cost of beginning work in process inventory + Cost added during the period) ÷ Equivalent units of production.
C) Cost added during the period ÷ Equivalent units of production.
D) (Cost added during the period − Cost of beginning work in process inventory) ÷ Equivalent units of production.

Accepted Answer

Under the FIFO method, the cost per equivalent unit is calculated using only the costs added during the period divided by the equivalent units of production.

Question 18

The cost per equivalent unit under the FIFO method of process costing is equal to the cost added during the period divided by the equivalent units of production for the period.

Accepted Answer

This is correct. Under the FIFO method of process costing, the cost per equivalent unit is determined by dividing the total cost added during the period (direct materials, direct labor, and overhead) by the equivalent units of production completed during the period. This formula takes into account the costs of all units that were partially or fully completed during the period, regardless of whether they were started before or after the beginning of the period.

Question 19

In the cost reconciliation report under the FIFO method,the costs accounted for equals the cost of beginning work in process inventory plus the costs added during the period.

Accepted Answer

Under the FIFO method, the costs accounted for in the cost reconciliation report equal the costs of the beginning work in process inventory plus the costs added during the period minus the costs associated with the beginning inventory, as FIFO assumes the first units in are the first units out, focusing only on the costs added during the current period for units started and completed.

Question 20

The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
D) All of the above.

Accepted Answer

The weighted-average method does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production. The FIFO method, on the other hand, does consider the degree of completion of beginning work in process inventory. The other options (B and C) are not correct, as the weighted-average method does not assume that ending work in process inventory is fully complete, nor does it always yield a higher cost per equivalent unit.

Quiz 20: Fifo Method