Weighted Average Method, Unit Costs, Valuing Inventories Byford Inc. produces a product that passes through two processes. During November, equivalent units were calculated using the weighted average method: Units completed 196,000 Add: Units in EWIP X Fraction complete (60,000 X 40%) 24,000 Equivalent units of output (weighted average) 220,000 Less: Units in BWIP X Fraction complete (50,000 X 70%) 35,000 Equivalent units of output (FIFO) 185,000 The costs that Byford had to account for during the month of November were as follows: BWIP $107,000 Costs added 993,000 Total $1,100,000 Required:

1. Using the weighted average method, determine unit cost. $ per unit

2. Under the weighted average method, what is the total cost of units transferred out? What is the cost assigned to units in ending inventory? Cost of units transferred out $ Cost of ending inventory $

3. Bill Johnson, the manager of Byford, is considering switching from weighted average to FIFO. Explain the key differences between the two approaches and make a recommendation to Bill about which method should be used.

The weighted average method is _______ to use than FIFO, but it does not reflect the unit cost as well if costs are changing significantly from one period to the next. __________ calculates the unit cost using only costs of the current period and output of the current period. ________ rolls back and picks up the costs and output in BWIP and counts them as if they belong to the current period. These costs and output of two periods are mixed. There is a significant difference in the unit cost of the prior period from the ,unit cost of the current period. If this type of cost fluctuation is typical, Byford should switch to ________.