It Is Necessary to Calculate Equivalent Units of Production in a Department

question 149

Multiple Choice

It is necessary to calculate equivalent units of production in a department because

• A) a physical count of units is impossible.
• B) some units worked on in the department are not fully complete.
• C) the physical units in the department are always 100% complete.
• D) at times a department may use a job order cost system and then switch to a process cost system.

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Definitions:

Transitory Components

Elements affecting financial statements or economic conditions that are expected to be temporary and not indicative of ongoing future performance.

Value-Irrelevant

Financial information or factors that do not impact an investor's or decision maker's assessment of a company's value.

Reported Earnings

The net income that a company reports to its investors and shareholders, often found on its income statement.

Abnormal Earnings

Profits that exceed or fall short of the expected normal return for a given year or period.