Kenneth is the controller for Little Gems, a factory that manufactures small identical red gemstones. Their first month of operation was March of this year, and management feels that they are off to a strong start with a lot of potential for growth. They have asked Kenneth to move forward with the preparation of their Process Costing information for April. Kenneth is still preparing the data for April but should be able to ascertain the information he needs from what is currently in the system for March and most of April. He has gathered and compiled the following data about the gemstones:
Before Kenneth can begin assigning costs to Ending Work-in-Progress (WIP) and Finished Goods (FG) Inventory, he must first focus his attention on determining the appropriate number of units to use moving forward. (Round your answer to the nearest whole unit.)
a. What are the equivalent units of production for Direct Materials (DM) and Conversion Costs (CC) using the First-In, First-Out (FIFO) method?
b. What are the equivalent units of production for DM and CC using the Weighted-Average method?
c. After Kenneth has completed these initial calculations, which method do you believe he will recommend between FIFO and Weighted-Average? What are some of the characteristics of each method?

Question

Kenneth is the controller for Little Gems, a factory that manufactures small identical red gemstones. Their first month of operation was March of this year, and management feels that they are off to a strong start with a lot of potential for growth. They have asked Kenneth to move forward with the preparation of their Process Costing information for April. Kenneth is still preparing the data for April but should be able to ascertain the information he needs from what is currently in the system for March and most of April. He has gathered and compiled the following data about the gemstones:
  Before Kenneth can begin assigning costs to Ending Work-in-Progress (WIP) and Finished Goods (FG) Inventory, he must first focus his attention on determining the appropriate number of units to use moving forward. (Round your answer to the nearest whole unit.)
a. What are the equivalent units of production for Direct Materials (DM) and Conversion Costs (CC) using the First-In, First-Out (FIFO) method?
b. What are the equivalent units of production for DM and CC using the Weighted-Average method?
c. After Kenneth has completed these initial calculations, which method do you believe he will recommend between FIFO and Weighted-Average? What are some of the characteristics of each method?

Quizplus · Accepted Answer

The Answer of Kenneth is the controller for Little Gems, a factory that manufactures small identical red gemstones. Their first month of operation was March of this year, and management feels that they are off to a strong start with a lot of potential for growth. They have asked Kenneth to move forward with the preparation of their Process Costing information for April. Kenneth is still preparing the data for April but should be able to ascertain the information he needs from what is currently in the system for March and most of April. He has gathered and compiled the following data about the gemstones:
  Before Kenneth can begin assigning costs to Ending Work-in-Progress (WIP) and Finished Goods (FG) Inventory, he must first focus his attention on determining the appropriate number of units to use moving forward. (Round your answer to the nearest whole unit.)
a. What are the equivalent units of production for Direct Materials (DM) and Conversion Costs (CC) using the First-In, First-Out (FIFO) method?
b. What are the equivalent units of production for DM and CC using the Weighted-Average method?
c. After Kenneth has completed these initial calculations, which method do you believe he will recommend between FIFO and Weighted-Average? What are some of the characteristics of each method?

Kenneth Is the Controller for Little Gems, a Factory That