(Appendix 4A)All production costs have been steadily rising in the Donner Company for several periods,and the company maintains large work-in-process inventories.What is the Donner Company's cost per equivalent unit,as computed using the FIFO method?
A) The same as that computed under the weighted-average method.
B) Higher than that computed under the weighted-average method.
C) Lower than that computed under the weighted-average method.
D) It could be the lower than,the same as,or higher than that computed under the weighted-average method.

Question

Quizplus · Accepted Answer

Under the FIFO method, only the costs incurred in the current period are considered, while the weighted-average method averages costs over both current and prior periods. With rising costs, the FIFO method will result in a higher cost per equivalent unit compared to the weighted-average method.

(Appendix 4A)All Production Costs Have Been Steadily Rising in the Donner