In a process costing system,equivalent units must be calculated separately for materials and conversion costs.

Question

Quizplus · Accepted Answer

Equivalent units must be calculated separately for materials and conversion costs because they represent different stages in the manufacturing process. Materials are typically added at the beginning of the process, while conversion costs (such as direct labor and manufacturing overhead) are added as the product moves through various production stages. Therefore, it is important to calculate equivalent units separately for both materials and conversion costs in order to accurately allocate costs to each stage of production.

In a Process Costing System,equivalent Units Must Be Calculated Separately