all production costs have been steadily rising in the donner company for several periods. the company…

all production costs have been steadily rising in the donner company for several periods. the company maintains large work - in - process inventories. donner companys cost per equivalent unit computed using the fifo method would be\nlower than that computed under the weighted - average method.\nslightly higher than that computed under the weighted - average method.\nmuch higher than that computed under the weighted - average method.\nthe same as that computed under the weighted - average method.

all production costs have been steadily rising in the donner company for several periods. the company maintains large work - in - process inventories. donner companys cost per equivalent unit computed using the fifo method would be\nlower than that computed under the weighted - average method.\nslightly higher than that computed under the weighted - average method.\nmuch higher than that computed under the weighted - average method.\nthe same as that computed under the weighted - average method.

Answer

Brief Explanations:

  • Weighted - average method: It combines beginning work - in - process costs with current period costs. When costs are rising, it includes the lower costs from the beginning work - in - process (which were incurred in prior periods when costs were lower) in the cost per equivalent unit calculation.
  • FIFO method: It only considers current period costs for the cost per equivalent unit calculation. Since current period costs are rising, and FIFO does not average in the lower costs from the beginning work - in - process (as it assumes that the beginning inventory is completed first and its costs are accounted for separately), the cost per equivalent unit under FIFO will be higher than under weighted - average. But since the increase in costs is steady (not a huge jump), it will be slightly higher.

Answer:

slightly higher than that computed under the weighted - average method.