Which of the Following Is the Best Explanation for Why

question 211

Multiple Choice

Which of the following is the best explanation for why it is necessary to calculate equivalent units of production in a process costing environment?

• A) In most process costing systems, direct materials are added at the beginning of the process while conversion costs are added evenly throughout the manufacturing process.
• B) All of the work to make a unit 100% complete and ready to move to the next stage of production or to finished goods inventory may not have been completed in a single time period.
• C) In most cases, there is no difference between physical units and equivalent units of production.
• D) Companies often use a combination of a process costing and job order costing systems.
• E) In most manufacturing environments, it is not possible to conduct a physical count of units.

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Definitions:

Profit

The income earned when the total revenue from business activities surpasses all related expenses, costs, and taxes.

Clearinghouse

A financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions.

Exercise

In finance, it refers to the act of executing one's right to buy or sell the underlying asset in options trading.

Futures Contract

A standardized agreement to buy or sell a specific asset at a predetermined price at a specified time in the future.