Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? A. In most cases, there is no difference between physical units and equivalent units of production. B. Companies often use a combination of a process costing and job order costing systems. C. In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process. D. All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period. E. In most manufacturing environments, it is not possible to conduct a physical count of units.

Question

02-07-2020
Business

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Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment? A. In most cases, there is no difference between physical units and equivalent units of production. B. Companies often use a combination of a process costing and job order costing systems. C. In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process. D. All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period. E. In most manufacturing environments, it is not possible to conduct a physical count of units.

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anthougo anthougo · Answer 1 · 2020-07-02T05:00:56+02:00

Answer:

C. In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process.

Explanation:

The equivalent unit is the unit of production that has been completed based on a percentage of completion. It is usually calculated for the conversion costs, which is added evenly throughout the period. The equivalent unit of production expresses the amount of work done on units of output that are partially completed at the end of an accounting period. Basically, the fully completed units and the partially completed units are expressed in terms of fully completed units. This helps in assigning costs to the partially completed units.