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Process Costing: Equivalent Units and FIFO Method in Accounting, Exams of Biology

Howard Community CollegeBiology

A concise overview of process costing, focusing on equivalent units and the fifo (first-in, first-out) method. it explains key concepts such as work-in-process (wip) inventory, finished goods inventory, and cost of goods manufactured (cogm), illustrating how these elements interact within a process costing system. Particularly useful for understanding the calculation of equivalent units and their application in allocating costs under the fifo assumption. it also clarifies the cost components involved in calculating the cost of goods completed and transferred out.

Typology: Exams

2024/2025

Available from 04/28/2025

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D101 - Unit 3 - Module 5 -
Process Costing /
Equivalent Units with
100% correct answers
Process Costing Factors
* Work needed to complete beginning WIP Inventory
* Work needed to start and complete units
* Work put into unit started but not completed
-- Ending WIP Inventory
FIFO Assumption
* First units completed and transferred out for current
period
* Equivalent # of units this period less than actual units
* Unlikely costs will remain in ending WIPI
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D101 - Unit 3 - Module 5 -

Process Costing /

Equivalent Units with

100% correct answers

Process Costing Factors

  • Work needed to complete beginning WIP Inventory
  • Work needed to start and complete units
  • Work put into unit started but not completed -- Ending WIP Inventory FIFO Assumption
  • First units completed and transferred out for current period
  • Equivalent # of units this period less than actual units
  • Unlikely costs will remain in ending WIPI Previous Play Next Rewind 10 seconds

Move forward 10 seconds Unmute 0: / 0: Full screen Brainpower Read More Physical Units

  • Actual units accounted for during the period -- # Units in beginning WIPI -- # Units started this period -- # Units must equal # units transferred to FGI and # units left in ending WIPI Ending WIPI Costs
  • Materials and conversion costs for units started and not completed by end of period Equivalent Units of Production
  • Measures production output during a period
  • Work done by center or department Conversion Costs

WIP Inventory Costs

  • Direct material costs
  • Conversion costs Units Completed Costs Components
  • Cost of beginning WIP inventory -- Materials & conversion costs
  • Cost PEU required to complete beginning WIPI -- Most or all are conversion costs
  • Cost PEU of started & completed for period -- Meterials & conversion costs FIFO Dollars In
  • Allocated between goods transferred out
  • Allocated to FGI based on unit costs and EUP Number of Equivalent Units
  • Single manufacturing process for single period -- Work performed on beginning WIP inventory -- Units started and completed -- Ending WIP inventory Cost Completed and Transferred Out
  • Beginning WIP inventory cost
  • Cost to complete beginning WIP inventory
  • Started & completed costs ---- Ending WIP inventory not included

Materials Equivalent Units

  • May be close or equal to actual number of physical unit in ending WIP inventory Materials Cost
  • Cost of direct materials
  • Can be easily identified with unit of production
  • Placed into production at start of process Costs Out Steps
  • Equivalent units of production
  • Product costs per unit
  • Costs transferred out
  • Cost of Ending WIPI