How the Weighted-Average and FIFO Methods of Process Costing Differ Even Without Ending Work-in-Process Inventories

There is no difference in the unit costs computed under the weighted-average and FIFO methods of process costing if there are no ending work-in-process inventories True or False

False

False.

There is a difference in the unit costs computed under the weighted-average and FIFO methods of process costing even if there are no ending work-in-process inventories.

Under FIFO method, the units that were started and completed during the month are costed using the current month’s materials and conversion costs, while the units that were started in the prior month and finished in the current month are costed using the prior month’s costs. On the other hand, under the weighted-average method, all of the costs from the current and prior periods are combined and averaged together to generate the cost per equivalent unit.

Thus, even if there are no ending work-in-process inventories, the difference in units costed using the current and prior month’s costs could result in different unit costs computed under the weighted-average and FIFO methods of process costing.

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