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Chapter_21_FIFO_and_Weighted_Average

# Chapter_21_FIFO_and_Weighted_Average - a Unit Components...

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EQUIVALENT UNITS OF PRODUCTION You are not responsible for this file's information. The weighted-average method is here just for your information. "Assume the following information: WIP, beginning 100 units, 25% complete Units completed and transferred out 600 units WIP, ending 200 units, 40% complete WEIGHTED-AVERAGE UNITS OF PRODUCTION Units completed and transferred out (always 100%) 600 WIP, ending 200 units * 40% 80 Equivalent units of production 680 FIFO EQUIVALENT NITS OF PRODUCTION WIP, beginning 100 units * 75% (to complete) 75 Units started and completed this period: Units completed and transferred out 600 Units in beginning inventory -100 500 WIP, ending 200 units * 40% 80 Equivalent units of production 655 See Step 2 in the file "Chapter 21_Equivalent Units FIFO"

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Comparison of FIFO and Weighted-Average:
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Unformatted text preview: a. Unit Components available in beginning inventory. b. Cost components FIFO represents only costs incurred in the current period (the 100 u. beg. inv. were deducted from 600 u.). The weighted-average approach includes both current period units plus prior period units." Cost per equivalent unit: Equivalent units = 680 Equivalent units = 655 Source: Adapted from Becker CPA Review, B-5, p. 24. 2007 Equivalent unit calculation under FIFO consistes of three elements representing current period production, whereas the calculation under the weighted-average method consists of only two elements that embrace units completed and Weighted-average = Beg. inv. cost + Current cost FIFO = Current cost only...
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