The Difference Between the Weighted Average and FIFO Methods of Computing

question 109

Multiple Choice

The difference between the weighted average and FIFO methods of computing equivalent units of production is the manner in which the

• A) Equivalent units for beginning inventory is computed
• B) Number of units started and completed is computed
• C) Equivalent units for ending inventory is computed
• D) Number of units completed and transferred out is computed

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated, used in allocating manufacturing costs.

Journal Entry

A record in accounting that shows a business transaction and its effect on the financial statements, consisting of debit and credit entries.

Predetermined Overhead Rate

A method employed to distribute manufacturing overhead costs to specific production units, utilizing projected expenses and levels of activity.

Equipment Depreciation

The method of allocating the cost of physical assets over their useful life, reflecting the loss of value over time.