COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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units completed by a production department in the period.
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number of units worked on during the period by a production department
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number of whole units that could have been completed if all work of the period had been used to produce whole units.
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identifiable units existing at the end of the period in a production department.
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Detailed explanation-1: -Equivalent units describe how much work has been done on a certain number of physical items. 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).
Detailed explanation-2: -Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period. In a process costing system, companies typically end each period with only Finished Goods Inventory.
Detailed explanation-3: -Equivalent units of production are equal to: b. number of units worked on during the period by a production department. Equivalent units are the estimated number of units worked on during the period. They are computed by multiplying the physical units by the percentage worked on during the period.
Detailed explanation-4: -Equivalent units of production are always the same as the total number of physical units finished during the period. A company that uses a process cost accounting system maintains separate Work-in-Process Inventory account for EACH of its manufacturing departments.