Byford Inc. produces a product that passes through two processes. During November, equivalent units were calculated using
Question:
Units completed .................... 196,000
Add: Units in EWIP 3 Fraction complete
(60,000 3 40 percent) ................ 24,000
Equivalent units of output (weighted average) ..... 220,000
Less: Units in BWIP 3 Fraction complete
(50,000 3 70 percent) ................ 35,000
Equivalent units of output (FIFO) ........... 185,000
The costs that Byford had to account for during the month of November were as follows:
BWIP.............$ 107 000
Costs added ............ 993,000
Total ............. $1,100,000
Required:
1. Using the weighted average method, determine unit cost.
2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory?
3. Bill Johnson, the manager of Byford, is considering switching from Weighted Average to FIFO. Explain the key differences between the two approaches and make a recommendation to Bill about which method should be used. Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
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