The weighted-average method of process costing differs from the first-in, first-out method of process costing in that the weighted-average method:
A) does not consider the degree of completion of beginning work in process inventory when computing equivalent units of production.
B) considers ending work in process inventory to be fully complete.
C) will always yield a higher cost per equivalent unit.
D) All of the choices are correct.

Question

Quizplus · Accepted Answer

The weighted-average method considers the degree of completion of beginning work in process inventory when computing equivalent units of production. This is because it takes the total costs incurred during the period (including beginning inventory costs) and divides it by the total equivalent units of production. Therefore, the equivalent units of beginning work in process inventory are included in the computation. Option B is incorrect because the weighted-average method considers ending work in process inventory to be partially complete. Option C is also incorrect because the cost per equivalent unit is calculated by dividing the total cost by the total equivalent units, and this amount may be higher or lower than the cost per equivalent unit calculated using the FIFO method.

The Weighted-Average Method of Process Costing Differs from the First-In