COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Materials-$2.52; Conversion Costs-$2.50
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Materials-$2.84; Conversion Costs-$2.33
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Materials-$2.52; Conversion Costs-$2.33
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Materials-$2.84; Conversion Costs-$2.50
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Detailed explanation-1: -To simply calculate equivalent units, you can multiply the number of physical items by the percentage of the work done on them. For two items that are 50% done, you would have one equivalent unit (2 x 50% = 1). When the items are completely finished, the number of equivalent units is equal to the physical items.
Detailed explanation-2: -To calculate cost per equivalent unit by taking the total costs (both beginning work in process and costs added this period) and divide by the total equivalent units.
Detailed explanation-3: -An equivalent unit is a term used to describe work-in-progress inventory units at the end of a specific time period. It defines the number of completed units of a particular item that the company could have produced, given the amount of costs that were incurred during that time period for all items not yet completed.
Detailed explanation-4: -Process costing requires the use of equivalent units.