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

---

Definitions:

Preventative Maintenance

A maintenance strategy involving regular, routine checks, servicing, and repairs to prevent potential problems and ensure equipment continues to operate efficiently.

Breakdown Cost

The expenses incurred when a machine or system fails, including repair costs, lost productivity, and potential penalties for delayed deliveries.

Likelihood of Breakdown

The probability or chance that a system or component will fail to perform its intended function.

Component Reliability

A measure of the likelihood that a component will perform its required function under specified conditions for a certain period without failure.