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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.
Weighted-Average Method
An inventory costing method that averages the cost of goods available for sale and assigns that average cost to the units sold.
FIFO Method
A method in accounting for managing inventories and financial matters where the first items placed in inventory are the first ones to be used or sold.
Equivalent Units
A concept used in cost accounting to express the amount of work done by an incomplete production process on units of output, converted into an equivalent number of fully completed units.
- Scrutinize how the FIFO method is applied in calculating equivalent units of production.
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Learning Objectives
- Scrutinize how the FIFO method is applied in calculating equivalent units of production.
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