Describe briefly the methods for valuation of work-in-process followed in Process Costing. OR Contemplate the list of functions given below and…

Mainly two methods for valuation of work-in-process are followed: (i) First-in-first-out (FIFO) method: Under this method the units completed and transferred are taken from both opening work-in-process (WIP) and freshly introduced materials/inputs. The cost to complete the opening WIP and other completed units are calculated separately. The cost of opening WIP is added to cost incurred on completing the incomplete (WIP) units into complete one. The total cost of units completed and transferred is calculated by adding opening WIP cost to cost on freshly introduced inputs. In this method the closing stock of work in process is valued at current cost. (ii) Weighted Average (Average) Method: Under this method, the cost of opening work-in-process and cost of the current period are aggregated and the aggregate cost is divided by output in terms of completed units. The equivalent production in this case consists of work-load already contained in opening work-in-process and work-load of current period. The main difference between FIFO method and average method is that units of opening work in process and their cost are taken in full under average method while under FIFO method only the remaining work done now is considered. OR (c) Function Scope of Cost Accounting (i) Cost Control (ii) Cost Report (iii) Cost Comparison (iv) Cost Analysis