When Will the Weighted Average and FIFO Methods Compute the Same

question 134

Multiple Choice

When will the weighted average and FIFO methods compute the same dollar amount for the costs to be transferred to the next department?

• A) When there are no units in ending inventory
• B) When there are no units in beginning inventory
• C) When the number of units in beginning inventory equals the number of units in ending inventory
• D) When beginning and ending inventory were at the same stage of completion

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Definitions:

Underapplied Overhead

A situation where the allocated manufacturing overhead for a period is less than the actual overhead incurred, leading to underestimating product costs.

Overapplied Overhead

A situation where the allocated manufacturing overhead costs exceed the actual overhead costs incurred.

Ending Work in Process Inventory

The value of partially completed goods or products in a company at the end of an accounting period.

Overapplied Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.