Explain any difference between the cost of work completed and transferred out and the cost of ending work in process inventory in the assembly department under the$$ weighted$-$average method and the FIFO method.

The FIFO ending work in process inventory is

$$

higher

lower

than the$$ weighted$-$average ending inventory. This is because FIFO assumes that all the

$$

higher$-$cost current$-$period units

higher$-$cost prior$-$period units

lower$-$cost current$-$period units

lower$-$cost prior$-$period units

in work in process are the first to be completed and transferred out while ending work in process consists of only the

$$

higher$-$cost current$-$period units.

higher$-$cost prior$-$period units.

lower$-$cost current$-$period units.

lower$-$cost prior$-$period units.

Part $7$

The$$ weighted$-$average method

$$

creates a greatly higher cost per equivalent unit

smoothes out cost per equivalent unit

by assuming that

$$

more of the higher$-$cost units

only a few of the higher$-$cost units

are completed and transferred$$ out, while

$$

none of the lower$-$cost units

some of the lower$-$cost units

in beginning work in process are placed in ending work in process.$$ Hence, in this$$ case, the$$ weighted$-$average method results in a

$$

higher

lower

cost of units completed and transferred out and a

$$

higher

lower

ending$$ work$-$in$-$process inventory relative to FIFO.