The First-In, First-Out Method Computes Unit Costs by

question 30

Multiple Choice

The first-in, first-out method computes unit costs by

• A)dividing total units by units completed this period.
• B)confining equivalent units to the work completed during the current period only.
• C)the standard-costing method.
• D)separately identifying the conversion costs of beginning and ending inventories.
• E)adding opening inventory units to work-in-process units and dividing by total cost.

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Definitions:

Finished Goods Inventory

Finished goods inventory consists of items that have completed the manufacturing process and are ready to be sold to customers, representing a final stage in product inventory.

Weighted-Average Method

An inventory costing method that assigns a weighted average cost to each unit of inventory, based on the cost of goods available for sale and the number of units available.

Equivalent Units

Equivalent units are a concept in cost accounting used to assign costs to partially completed goods, converting them into the amount of finished goods units they represent.

Direct Materials Cost

The expenditure on raw materials that are directly involved in the production of a good or service.