Which of the following is false concerning equivalent units?
A)Equivalent units are calculated separately for each cost category.
B)Equivalent units are equal to physical units.
C)Equivalent units measure output in terms of the physical quantities of the inputs consumed.
D)Equivalent units are necessary when process costing is used.
E)The number of equivalent units may be identical for direct materials and for conversion costs.

Question

Quizplus · Accepted Answer

Equivalent units are not always equal to physical units. For example, if a certain amount of direct materials are added in one department, those materials may not be fully processed and may require further work in the department before they are considered complete. In this case, the equivalent units for direct materials would be greater than the actual physical units added.

Which of the Following Is False Concerning Equivalent Units