Process Costing: FIFO Method (Cost Accounting Tutorial #31)

⌚Timestamps
0:00 - Introduction
0:48 - Physical Flow Schedule
1:44 - Equivalent Units Calculation
5:24 - Cost Per Equivalent Unit
7:56 - COG Transferred Out and EWIP Valuation
16:08 - Cost Reconciliation

In this lesson I'll be creating a production report using an example problem, but this time, I'll be using the FIFO method. The FIFO method will affect our equivalent units, cost per equivalent unit as well as our cost of goods transferred out and EWIP account. It's a complicated method for process costing, but it should be learned as a CPA concept.

At the end, I'll illustrate the logic behind FIFO and we'll look at a comparison of the two methods!

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[AidanMyHeart]

Perfect! Thank you so much! I think it is sad that I am paying for a Master's degree in Accounting and I am learning more from you watching your videos than I am from my professors...

[cavelgreen]

When using the FIFO method, for the equivalent units section my lecturer taught us to put 0 under BWIP for direct materials because it was 100% completed. Then we find the remaining portion of BWIP for conversion cost that needs to be completed since its 40% in your question we would (100 - 40) = 60% * 100, 000 units = 60, 000 units for Conversion Costs. When working out your question this is what I got for equivalent units
Equivalent Units. DM CC
Units Started 370, 000 370, 000
BWIP. - 60, 000
EWIP. 50, 000 20, 000
Ttal Equivalent Units 420, 000 450, 000

[lauren]

I know this video has been around for a while but I just found it and wanted to say THANK YOU! This explanation was so clear and easy to follow!

[sunidhibhargav]

I am learned from you so easily! Thank god tht utube is free because i am paying tuition for nothing.

[obitouchiha]

thanks so much for the video! helped me get through my homework

[montalesjohnpenielnitro]

should have watched this instead of our discussions. Very concise and student friendly!

[opheliewang]

thanks ! I have been struggling with this, so lucky to have u here! really useful

[Pipssullivan]

For the beginning WIP my book and my professor said to subtract 100% from the amount completed. So, it would be 60% for BWIP conversion not 40%, and then 0% for BWIP DM.
Or is there a reason you are using the 40% and 100%? I am so confused now.

[amirrezaax]

The concept is still a bit odd to me but your video helped a lot. Thanks 👍

[jmejean]

Thank you so much! This is very helpful!

[cassiamuli]

Hi is there a way to make a production report to know the percentage of work? What i mean is that i was asked to make a production report of waste management and they wanted to know if they hit their target by the end of 2020. How will i start this please help me.

[RVC]

Thanks for this. Gosh FIFO method is painful.

[regularbloke]

when you do spreadsheet nunbers are so small that it is impossible to see them

[amrgamal]

Why step 2 - conversation cost bwip you take time 40%? I think it should be 60% cause this percentage represent the work will done during the period..
And same situation in ending wip, I think will be 40%..???

[kriella]

I wish you could discuss short term decision and short term budget. Also consolidation

[cadenjester]

Can we get a download for this excel template?

[MrNoluyolo]

Hi.
The excel spreadsheet is too small i cant see the amounts written.

[triciahana]

Thank you so much for making this video, very helpful