Which of the following statements is most accurate?
A) In process costing, estimating the degree of completion of units is usually more accurate for conversion costs than for direct materials.
B) The weighted average method uses the stage of completion of the current period's beginning goods in process inventory account in calculating equivalent units.
C) The weighted average method focuses on the total costs and total equivalent units completed to date; this is the major difference between the weighted average method and the FIFO method of calculating equivalent units of production.
D) The FIFO method of calculating equivalent units of production merges the work and the costs of the beginning inventory with the work and the costs done during the current period.
E) It is not possible for there to be a significant difference between the cost of completed units between the weighted average and the FIFO methods.

Question

Quizplus · Accepted Answer

The weighted average method combines costs of the beginning inventory and the costs incurred during the current period to calculate the cost per equivalent unit, whereas the FIFO method calculates the cost per equivalent unit based solely on the costs incurred during the current period, ignoring the costs associated with the beginning inventory. This fundamental difference in approach is accurately captured in statement C.

Which of the Following Statements Is Most Accurate