Question

In: Accounting

Differentiate the treatment of spoilage using the First-in First-Out versus the weighted average costing method.

Differentiate the treatment of spoilage using the First-in First-Out versus the weighted average costing method.

Solutions

Expert Solution

Under the fifo method of inventory management, spoilage units are charged at the rate from the beginning inventory or earliest purchase units available after sale. Under the weighted average costing method, spoilage units are charged at a rate calculated on the basis of the weighted average cost of the available units. The difference is explained as per the below example:

1/1/2020 Beginning inventory 200@5 $1000

1/5/2020 Purchases 100@4 $400

1/25/2020 Spoilage 5 units


Cost of spoilage under fifo method = Spoilage units X Rate of beginning inventory = 5X5= $25

Cost of spoilage Under weighted average method:

Spoilage rate = Total cost available/ Total units available

                       = (1000+400)/(200+100) =

                       = 4.67

Cost of spoilage = Spoilage units X Spoilage rate = 5 X4.67 = $23.35

Please give likes for the work. Thanks & Regards.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

1.Provide the differences between a weighted-average method of process costing and a first-in, first-out (FIFO) method...
1.Provide the differences between a weighted-average method of process costing and a first-in, first-out (FIFO) method of process costing
. Using the weighted average process costing method, what is the total physical units to be...
. Using the weighted average process costing method, what is the total physical units to be accounted for? 2. Using the weighted average process costing method, what is the total cost? 3. Using the weighted average process costing method, what is the material cost per equivalent unit? 4. Using weighted average process costing method, what is the cost of units completed and transferred out? 5. Using the weighted average process costing method, what is the cost of ending work in...
The​ first-in, first-out​ (FIFO) method creates better​ month-to-month cost comparisons than the​ weighted-average method​ ________. A....
The​ first-in, first-out​ (FIFO) method creates better​ month-to-month cost comparisons than the​ weighted-average method​ ________. A. because it merges costs from the prior period with the current period B. because it does not recognize transferred in units from other processes C. when there are substantial quantities of units in process at the end of the period D. because it is used by industries that do not experience significant cost changes
To reconcile the number of physical units using the weighted average method of process costing, one...
To reconcile the number of physical units using the weighted average method of process costing, one must determine whether the units were: using direct materials or conversion costs at the end of the period. in the next production process or sold at the end of the period. completed or still in process at the end of the period. sold or still in inventory at the end of the period.
Using the Weighted Average Method of process costing, what is the dollar value of inventory transferred...
Using the Weighted Average Method of process costing, what is the dollar value of inventory transferred out of the department? Please round rates to $0.01 and inventory amounts to $1. units percent complete cost WIP, beginning 3,053 44 % 37,486 Started 274,793 2,603,144 WIP, ending 1,270 50
Please by detiels !! Miramar, Inc. uses a weighted-average process costing system which recognizes normal spoilage...
Please by detiels !! Miramar, Inc. uses a weighted-average process costing system which recognizes normal spoilage as 5% of good output. During the current period, 14,000 units were started and 10,000 units completed. Materials are added at the beginning of the process, conversion costs occur uniformly, and the inspection point is at the 70% point. Beginning work in process was 6,000 units, 40% complete, and ending work in process 9,000 units, 80% complete. The cost per equivalent unit for material...
Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the...
Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,600 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $7,960. An additional 90,200 units were started into production during the month and 93,200 units were completed in the Welding Department and transferred to the next processing department. There...
Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the...
Hache Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 17,000 units in its beginning work in process inventory that were 20% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $7,480. An additional 89,000 units were started into production during the month and 92,000 units were completed in the Welding Department and transferred to the next processing department. There...
David Corporation uses the weighted-average method in its process costing system. The first processing department, the...
David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units in its beginning work in process inventory that were 60% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $126,200. An additional 71,000 units were started into production during the month. There were 22,000 units in the ending work in process inventory of the Welding Department that were...
1.Describe costing inventory using first-in, first-out. Address the different treatment, if any, that must be given...
1.Describe costing inventory using first-in, first-out. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating. 2. Describe costing inventory using last-in, first-out. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating. 3.Describe costing inventory using weighted average. Address the different treatment, if any, that must be given for periodic and perpetual inventory updating.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT