Professor Jones Is Concerned That Her Students Do Not Understand

question 23

Essay

Professor Jones is concerned that her students do not understand the concept of equivalent units. She has therefore prepared the following questions, to appear on an upcoming examination:
Equivalent units are used in a process-costing accounting system.
Required:
A. Explain the need for equivalent units and why separate equivalent-unit totals are calculated for direct materials and conversion cost.
B. If an examination of goods in production at the end of the period revealed 12,000 units that are, on average, 75% complete, would it be correct to say that 9,000 units were finished during the period? Why?
Required:
Prepare a complete answer key that can be used in grading the examination questions.