The cost per equivalent unit is computed as:
A)total costs to account for divided by total equivalent units.
B)total equivalent units divided by total costs to account for.
C)costs in beginning WIP inventory divided by equivalent units in beginning WIP.
D)costs added to production during the month divided by equivalent units in ending WIP.

Question

Quizplus · Accepted Answer

The cost per equivalent unit is computed as the total costs to account for (including beginning WIP inventory) divided by total equivalent units (including ending WIP inventory). Choice A matches this definition, making it the best choice. Choice B has the two variables switched in its formula. Choice C only takes into account the beginning WIP inventory, whereas the cost per equivalent unit considers all costs incurred during production. Choice D only takes into account the costs added during the month, but the cost per equivalent unit includes all costs to account for.

The Cost Per Equivalent Unit Is Computed As