Why Are Equivalent Units of Production Used in Process Costing

question 49

Multiple Choice

Why are equivalent units of production used in process costing?

• A)To determine the total of overhead costs
• B)To determine the number of units in work in process and finished goods inventories
• C)To determine the costs per unit and costs of inventories in each process
• D)To determine the length of the process

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Definitions:

Debt-Equity Ratio

The ratio indicating a corporation's reliance on debt financing, found by dividing its total debts by the equity held by its shareholders.

After-Tax Cost of Debt

The net cost of debt after accounting for the effects of taxes, reflecting the actual cost to a company.

Cost of Equity

The theoretical compensation paid by a company to its equity investors, or shareholders, for the risk involved in investing their capital.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay to all its security holders to finance its assets.