When Computing the Cost Per Equivalent Unit, the FIFO Process

question 127

Multiple Choice

When computing the cost per equivalent unit, the FIFO process costing method considers

• A) current costs only.
• B) current costs plus ending work in process inventory costs.
• C) current costs less ending work in process inventory costs.
• D) current costs plus beginning work in process inventory costs.

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Definitions:

Manufacturing Overhead

The indirect production costs that are not directly associated with the manufacturing of products, such as utilities and rent for the manufacturing facility.

Predetermined Overhead Rate

A computed rate used for applying overhead costs to products or job orders, calculated before the period begins based on estimated costs.

Machine-Hours

The total hours that machinery is operating during a specific period, often used for allocating manufacturing overhead costs.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production.