When the average cost method is used, units in beginning inventory which are 40 percent complete are multiplied by 60 percent to calculate equivalent units of production.

Question

Quizplus · Accepted Answer

When using the average cost method, the percentage completion of beginning inventory units is not used to calculate equivalent units of production. Instead, the method averages the costs of beginning inventory and the costs of production during the period to determine the cost per equivalent unit.

When the Average Cost Method Is Used, Units in Beginning