Using Conversion Cost Per Equivalent Unit Is Appropriate for Many

question 92

Multiple Choice

Using conversion cost per equivalent unit is appropriate for many businesses that use process costing because:

• A)Direct materials and direct labor are usually entered into the production process at the same rate.
• B)All manufacturing costs are entered into the production process in the same period.
• C)Equivalent cost per unit is not sufficient measurement of production activity.
• D)The weighted average method of calculating equivalent units requires it.
• E)Direct labor and factory overhead enter the production process at the same rate.

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Definitions:

Expense

An outflow of money to another person or company to pay for an item or service, or for a cost required to operate a business.

Allowance for Doubtful Accounts

A contra-asset account that estimates the portion of accounts receivable which may not be collectible.

Adjusted

Changed or modified to reflect a more accurate valuation or account of a particular item or financial record.

Accounting Period

The span of time at the end of which a company or organization reports its financial performance and position; typically monthly, quarterly, or annually.