Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?
A) In most manufacturing environments, it is not possible to conduct a physical count of units.
B) Companies often use a combination of a process costing and job order costing systems.
C) In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process.
D) All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period.
E) In most cases, there is no difference between physical units and equivalent units of production.

Question

Quizplus · Accepted Answer

Calculating equivalent units of production is necessary in process costing because not all the work required to make a unit complete may be completed in a single time period. Equivalent units help account for partially completed units and enable accurate measurement of the total units produced during a specific time frame.

Which of the Following Is the Best Explanation for Why