Equivalent units are tracked separately for which two categories of costs?
A)Direct labor and manufacturing overhead.
B)Direct materials and conversion cost.
C)Direct materials and indirect materials.
D)Finished goods and cost of goods sold.

Question

Quizplus · Accepted Answer

Equivalent units are tracked separately for direct materials and conversion cost in order to properly allocate and assign costs to the appropriate categories. Direct materials refer to the raw materials used in production, while conversion cost includes the costs of labor and overhead required to convert those materials into finished products. By tracking equivalent units separately for these two categories, managers can better understand the total cost of production and make more informed decisions about pricing, profitability, and resource allocation.

Equivalent Units Are Tracked Separately for Which Two Categories of Costs