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Summary Cost Acc CH 6
Summary Cost Acc CH 6
Under the fifo cost flow assumption, the cost of the first units transferred out of the
department.
The balance of the units to be accounted for contained only current period cost.
As a consequence of this inventory layering procedure, equivalent units are computed
inventory.
To compute the equivalent units of current period cost required to complete the units
in beginning inventory, the stage of completion of the beginning inventory must be
known.
The cost per equivalent unit for each element of current period cost is determined by
dividing the cost added during the current period for each cost elements by the
number of equivalent units of that cost elements added in the current period.