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

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⌚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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[@cavelgreen3109]

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

[@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...

[@aminulislam20152]

seriously!!!!! huh

[@mahoganydrugportal5736]

this sounds familiar..this channel will surely get my MBA degree as refered by my Alums.

[@sunidhibhargav1909]

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

[@opheliewang5317]

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

[@montalesjohnpenielnitro5658]

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

[@lauren2906]

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!

[@NotepirateDave]

Love to see that the content is still proving to be useful for students :)

[@Carthy12]

@@NotepirateDave You have so many subs, why did you stop uploading?

[@NotepirateDave]

​@@Carthy12I'm still around! I would like to return to content creation at some point but I'm enjoying the opportunity to learn more in industry while exploring other areas like financial system plumbing and macroeconomics. Happy that students still come back to lessons!

[@triciahana2183]

Thank you so much for making this video, very helpful

[@jmejean21]

Thank you so much! This is very helpful!

[@evansmith1973]

this guy is awesome. thanks man!!

[@bryper7289]

Thank you, thank you so much!

[@RVC0902]

Thanks for this. Gosh FIFO method is painful.

[@kycreekguy211]

Thank you!

[@NotepirateDave]

No problemo!

[@cassiamuli5918]

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.

[@amirrezaax22]

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

[@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.

[@chester2807]

Agree with you, here is an mistake

[@cadenjester893]

Can we get a download for this excel template?

[@mahoganydrugportal5736]

Helps alot

[@NotepirateDave]

Great to hear!

[@mahoganydrugportal5736]

Yes. most especially during this Quarantine Era. More power

[@regularbloke7410]

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

[@kriella30]

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

[@NotepirateDave]

I'll try and post some lessons before the end of the month!

[@kriella30]

Thank you so much, I just really love the way you explain it is very effective and easy to understand. I hope financial accounting too

[@amrgamal6651]

Why step 2 - conversation cost bwip you take 100000 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%..???

[@rohitgupta7339]

100000*40%= (40000) this is the amount(BWIP) that has already been completed in the previous year therefore we must reduce the completed unit by 40000 that is (370000-40000=330000) and further we must add 60% of (EWIP) that is (50000*60%=30000) since these units are produced in this year and hence your total equivalent units for this year are ( 330000+30000=360000) .

[@MrNoluyolo]

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

[@MrNoluyolo]

i am using my PC if only there was a zoom function i can use

[@viharneelakanti9720]

it is absolutely wrong answer