Jennifer is the head cost accountant for Pure Inc., a factory that produces hand sanitizer. Pure has recently experienced an uptick in sales and has been refining their accounting policies. Jennifer has been tasked with gathering data pertaining to their costs for the most recent month, June. She has gathered the following information:
Costs in Beginning Work-in-Progress (WIP)
What amount of the cost of Antimicrobial Solution will be included in the calculation of equivalent cost per unit under First-In, First-Out (FIFO) and Weighted-Average (WA), respectively?

Question

Jennifer is the head cost accountant for Pure Inc., a factory that produces hand sanitizer. Pure has recently experienced an uptick in sales and has been refining their accounting policies. Jennifer has been tasked with gathering data pertaining to their costs for the most recent month, June. She has gathered the following information:
Costs in Beginning Work-in-Progress (WIP) 
What amount of the cost of Antimicrobial Solution will be included in the calculation of equivalent cost per unit under First-In, First-Out (FIFO) and Weighted-Average (WA), respectively?

Quizplus · Accepted Answer

This question requires a grasp on how to calculate the Direct Materials cost that will ultimately be included in the calculation of equivalent cost per unit. Also, know that the Antimicrobial Solution is the Direct Material, even though it is not labeled as such. Using FIFO, this calculation will not include the beginning inventory, but using the Weighted-Average method will include all accumulated costs. For FIFO, the amount added during June will be $19,678. Using the Weighted-Average method, the combined total of what was present at the beginning and what was added during June will be used: $5,677 + $19,678 = $25,355.

Jennifer Is the Head Cost Accountant for Pure Inc