Answer
FIFO computations assign the cost of previous period's work in process to units completed first, followed by the current period's work. This is distinct from the weighted-average method, which uses a uniform average cost for all units.
Work Step by Step
The distinctive characteristic of FIFO computations is that they assign the cost of equivalent units from the previous accounting period's beginning work-in-process inventory to the first units completed and transferred out of the process. Then, the cost of equivalent units worked on during the current period is assigned first to complete beginning inventory, then to start and complete new units, and finally to units in ending work-in-process inventory. This is in contrast to the weighted-average method, which costs units completed and transferred out and units in ending work in process at the same average cost.
