ACC200 Introduction to Managerial Accounting
Chapter 4 Handout
Process Costing Problems
(FIFO Method)
STEP #1:
From the information given, compute the following three
items:
# of units in beginning WIP inventory and percent complete
# of units started and completed in the current period
# of units in ending WIP inventory and percent complete
STEP #2:
Using the three items from step #1, compute the
total number of equivalent
units
for the current period.
STEP #3
Compute the
cost per equivalent unit
by taking the
current period’s
costs ÷ total
EU’s (from Step #2).
STEP #4:
Calculate the
cost of ending work in process inventory
by taking the number of
EU’s in ending
WIP (from Step #1) and multiplying it by the cost per EU (from
step #3).
STEP #5:
Solve for the
COGM
.
This can be done in a couple of different ways. The easy
way to do it is to simply take the beginning costs + c
urrent period’s costs
and
subtract the costs of ending WIP from Step 4. (Note that Step 4 and Step 5 are
combined in your book)
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 Spring '08
 Buckless
 Managerial Accounting, Work in process

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