[ryan33]

Becker Question –

Has anyone else run into a problem with the comprehensive example for process costing under FIFO and Weighted Average? I’m referring to page B1-54&55. I felt completely comfortable with this until I saw this comprehensive example.

I understand the formulas in the pass key and seem to get all the class questions right, but here are my issues with the example:

1) FIFO is 3 steps – it uses beg. WIP x the % to be completed. The example shows Units in process at May 1 (materials) of 4,000 units at 100% complete. The answer key shows 0 for that which I would agree if 100% means there is 0% to be completed. But then for units started and completed (again materials only for now) it shows 100% of 10,000 and the answer key shows $10,000. Shouldn’t this be (10,000 completed – beginning 4,000 = 6,000)? Then you would add the ending units times the percentage completed (in this case 100% of 2,000).

2) Weighted average is 2 steps: Units completed plus ending units in process times percentage completed. Easy. However, the answer key shows 4,000 in beginning units in process. Why would beginning units play any factor in this if the two steps shown in the book are completed units and percentage of ending units in process completed?

Any help would be appreciated. Seems like a pretty dumb comprehensive example that is confusing and they skip right over it on the lectures. It’s frustrating that they teach FIFO as three steps, and weighted average as two steps but then the dumb comprehensive example makes it seem like FIFO has two and weighted average has three (if your picking up what I’m putting down). I’m sure it actually is right, but the way they present it isn’t remotely helpful.

Thanks!

FAR - 65,74,73,78
AUD - 72, 73
BEC -
REG -

[Biff-1955-Tannen]

I don't have the Becker book so I can't see what the problem says, but I'm bored right now so I'll give this a go.

Using FIFO it is Units completed + Ending Equivalent units – Beginning Equivalent units

Using Weighted Average is Units completed + Ending Equivalent units.

Beginning units are factored into this because weighted average uses work done this period, plus WIP from previous period (we don't explicitly add beginning equivalent units because they are already included in the units completed this period). FIFO does not use WIP from previous period, and so that is why we subtract the beginning equivalent units out.

AUD - 93
BEC - 83
FAR - 83
REG - 84

Nobody calls me chicken

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Author]

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