ECONOMICS

Detailed explanation-1: -Answer and Explanation: The statement is FALSE. Equivalent-unit calculations are necessary to allocate manufacturing costs between units COMPLETED AND TRANSFERRED OUT and ending work in process. Not all units completed and transferred out are however necessarily sold.

Detailed explanation-2: -Why is it necessary to use EUP in process costing? Equivalent units of production reflect the partial and completed work in terms of completed work, and therefore, it helps in determining the total work done.

Detailed explanation-3: -Calculating the equivalent units of production can help a company understand how much work and money they have put into their manufacturing process. Specifically, it’s a way to understand how much money, material and labor have been invested into items that are partially complete.

Detailed explanation-4: -Answer: The equivalent units of production needed in a process costing system. It is so because the company is required to know the cost of each single unit of the product to decide the selling proce per unit.

Detailed explanation-5: -What is Process Costing? Process costing is used when there is mass production of similar products, where the costs associated with individual units of output cannot be differentiated from each other. In other words, the cost of each product produced is assumed to be the same as the cost of every other product.