Why may the number of equivalent units in Work in Process inventory differ for material and for conversion costs?
A)A mistake was made in counting or recording the inventory amounts.
B)Material and conversion costs enter the production process at different times and at different rates.
C)Conversion costs are calculated at the end of the accounting period.
D)Some units may have been transferred in from previous departments.

Question

Quizplus · Accepted Answer

Material and conversion costs enter the production process at different times and at different rates, which can result in a difference in the number of equivalent units in Work in Process inventory for each cost category. Material costs are typically added to a unit of production at the beginning of the production process, while conversion costs are typically added throughout the production process. As a result, some units may have all their material costs added but not all their conversion costs, or vice versa, leading to a difference in the number of equivalent units for each cost category.

Why May the Number of Equivalent Units in Work in Process