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1.
Calculate the costs per equivalent unit for both the weighted-average method and FIFO method.
1.
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Explanation of Solution
Equivalent units: Equivalent units are the number of units that could have been performed given the amount of work actually performed, and for both partially complete units and complete units, the quantity of other production inputs used.
Calculate the costs per equivalent unit for direct materials using weighted-average method:
Hence, the costs per equivalent unit for direct materials using weighted-average method is $1.8250.
Calculate the costs per equivalent unit for conversion using weighted-average method:
Hence, the costs per equivalent unit for conversion using weighted-average method is $3.4500.
Calculate the costs per equivalent unit for direct materials using FIFO method:
Hence, the costs per equivalent unit for direct materials using FIFO method is $1.7500.
Calculate the costs per equivalent unit for conversion using FIFO method:
Hence, the costs per equivalent unit for conversion using FIFO method is $3.6500.
2.
Explain the difference between the equivalent unit costs of FIFO method and weighted-average method.
2.
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Explanation of Solution
Due to the per unit amount differences in current costs and beginning work-in-process, there are differences between the equivalent unit costs of FIFO method and weighted-average method. The cost per equivalent unit is based on current costs only, under the FIFO method, while in the weighted-average method, these differences are averaged together.
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Chapter 6 Solutions
Cost Management
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