7. Why should the FIFO method be called a modified or department FIFO method?

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Part 1

A. FIFO is applied within each department to compile the cost of units transferred in. As a practical matter, however, units transferred out during a given period usually are carried at a single unit cost (i.e., determined by top management at the beginning of the period). Otherwise, the attempt to track costs on a pure FIFO basis throughout a series of processes would be cumbersome.

B. Each department carries units transferred in during a given period at its own unit cost (determined by the actual costs incurred during the period). This provides the ability to track costs on a pure FIFO basis throughout a series of processes.

C. FIFO is applied within each department to compile the cost of units transferred out. As a practical matter, however, units transferred in during a given period usually are carried at a single average unit cost (i.e., the average cost of units transferred out of the preceding department). Otherwise, the attempt to track costs on a pure FIFO basis throughout a series of processes would be cumbersome.

D. None of the above are correct.

8.Transferred-in costs are treated as if they are:

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Part 1

A. costs of beginning inventory added at the beginning of the process

B. conversion costs added at the beginning of the process

C. direct labor costs added at the beginning of the process

D. a separate direct material added at the beginning of the process