First in first out or fifo method - work in progress, Cost Accounting

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First In First Out or FIFO Method - Work in Progress

This method considers merely those costs incurred throughout the recent period.  Equivalent units are calculated given as:

Equivalent Units= Units completed and transferred + (Units in ending W.I.P x% of completion - Units in beginning)

 X  % of completion

Cost/Equivalent Unit = Current Costs /Equivalent Units

Carefully Notice here that FIFO differentiates the "units started and completed in the recent period" from the units transferred and completed. This is done with subtracting the "beginning W.I.P." from the "units finished and transferred" and "the ending work in process".


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