Professor Jones Is Concerned That Her Students Do Not Understand

question 10

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.
A. Equivalent units are needed as a measure of production volume. At the end of the period, manufacturing costs must be spread over the units produced, and it is incorrect to combine fully completed units with those that are still in production (akin to adding apples and oranges). Separate totals are needed because materials are often introduced at specific points in production whereas conversion is often introduced uniformly throughout manufacturing.
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.
B. No. The units are still in production, so none of them are fully completed. It would be correct to say that the firm has done the work equivalent to manufacturing 9,000 finished units.

Understand the impact of prenatal exposure to psychoactive substances.

Acknowledge the complexity and challenges in classifying psychoactive drugs.

Recognize the long history and variety of human drug use.

Understand the implications of drug-induced changes in the synaptic process.

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Definitions:

Maturity Value

The amount payable to an investor at a security's maturity date, including both the principal and any final interest payments.

Bonds

Long-term debt instruments issued by corporations or governments to raise capital, with the issuer promising to pay back the principal along with interest on specified dates.

Annual Interest Payment

the amount of money paid in interest to lenders or bondholders over the course of a year.

Accounting Period

A specific period of time covered by financial statements, usually a fiscal quarter or year.