Measures of equivalent production are necessary in process costing because
A)job order costing procedures cannot be applied.
B)unit costs are computed by departments or processes at fixed time intervals.
C)perpetual inventories are not employed in process plants.
D)production methods are more complex than in job order costing systems.

Question

Quizplus · Accepted Answer

In process costing, unit costs are computed by departments or processes at fixed time intervals. Measures of equivalent production are used to determine the number of equivalent units produced during the period, taking into account partially completed units in the beginning and ending inventories. This is necessary because the production process involves continuous flow rather than discrete jobs, making it difficult to apply job order costing procedures. Perpetual inventories may or may not be employed, depending on the company's accounting system, but this is not the key reason for using measures of equivalent production in process costing. The complexity of production methods is also not the primary reason, although it may contribute to the need for careful measurement and tracking of production costs.

Measures of Equivalent Production Are Necessary in Process Costing Because