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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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When materials are added either at the beginning or the end of the process, a unit cost should be calculated for the

  1. a. materials and conversion categories.
  2. b. materials category only.
  3. c. materials and labor categories.
  4. d. conversion category only.
  5. e. labor category only.

To determine

Identify the categories for which unit cost should be calculated when materials are not added uniformly in the process.

Explanation

Equivalent Units of Production:

The total units of finished goods along with those goods that are not fully complete are known as equivalent units of production. In other words, equivalent units of production measures both completed and nearly completed units.

a.

Conversion cost is added uniformly throughout the process while material is added either in the beginning or at the end of the process. As such, equivalent units and unit cost of both material and conversion categories need to be computed separately. Therefore option a. is correct...

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