Question

Which of the following is a disadvantage of the nted-average method compared to the FIFO process-costing method? O A) FIFO is computationally simpler B) FIFO provides better management information for planning and control purposes C) when unit cost per input prices fluctuate markedly from month to month, its per unit cost is less representative than FIFO D) the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO

Answer 1

Answer:

1.D.the information it provides about changes in unit prices from one period to the next is less useful than the information provided by FIFO.

FIFO method gives correct picture of value of ending stock and cost of goods sold.The inflation factor can be judged correctly.Whereas in case of Weighted average the costs are averaged which gives a diluted picture

2.D.a seperate direct material added at the beginning of the process.

Transferred in costs are incurred in previous departments and carried forward in production cycle, enteries passed to replicate progress in production departments,