On 1^st June, Drabadore Ltd had 40,000 units in process, which were 30% completed. Materials are added at the beginning of the process. During the month 320,000 units were started and 340,000 completed. Ending work in process was 50% complete. By what amount would the equivalent units of materials differ if weighted average were used instead of FIFO? A) 40,000 more B) -0- C) 12,000 more D) 28,000 less

Question

Quizplus · Accepted Answer

Weighted average method assigns the cost of materials to the units completed and in ending work in process based on the average cost of materials used during the period. FIFO method assigns the cost of materials to the units completed and in ending work in process based on the cost of the first materials used during the period. In this case, the materials used during the period include the materials in beginning work in process, the materials added during the period, and the materials in ending work in process. The average cost of materials used during the period is lower than the cost of the first materials used during the period because the cost of materials has been increasing during the period. Therefore, the equivalent units of materials would be higher if weighted average were used instead of FIFO.

On 1st June, Drabadore Ltd Had 40,000 Units in Process

On 1^st June, Drabadore Ltd Had 40,000 Units in Process