Under the Weighted-Average Method, the Cost of Ending Work in Process

question 237

True/False

Under the weighted-average method, the cost of ending work in process inventory is determined by dividing the equivalent units of production for ending inventory by the cost per equivalent unit for each cost category and then summing the result.

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Definitions:

Predetermined Overhead Rates

A rate calculated before a period begins, used to estimate the manufacturing overhead costs that will be allocated to each unit of product.

Cost of Goods Sold

The total direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Activity Rate

A measure used in cost accounting to allocate costs to products or services based on the activities required to produce them.

Estimated Cost

An approximation of the cost to produce goods or services, used for budgeting and planning.