In a Process Costing System That Uses Equivalent Full Units

question 66

True/False

In a process costing system that uses equivalent full units of production, the per-unit cost of direct materials equals the total cost of materials used in the current month divided by the number of units completed and transferred during the current month.

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Definitions:

Completed Contract

An accounting method where revenue and income are recognized only after a contract is finished or the work is completely done.

Percentage Of Completion

An accounting method used to recognize revenue and expenses of long-term contracts proportionally as the contract progresses toward completion.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.

Inventory

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.