The average cost method of process costing differs from the FIFO method of process costing in that the average cost method:
A)Requires that ending work in process inventory be stated in terms of equivalent units of production.
B)Can be used under any cost-flow assumption.
C)Does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production.
D)Considers the ending work in process inventory only partially complete.

Question

Quizplus · Accepted Answer

The average cost method does not distinguish between work done in the current period and work done in previous periods on the beginning work in process inventory. It averages the costs, thus not considering the degree of completion of beginning work in process inventory when computing equivalent units of production.

The Average Cost Method of Process Costing Differs from the FIFO