In process costing, equivalent units are used mainly to:
Correct answer: B. Convert partly completed work into completed-unit terms
- A. Measure completed output only
- B. Convert partly completed work into completed-unit terms
- C. Separate selling expenses from factory costs
- D. Calculate the selling price of each customer order
Explanation
Equivalent units express partially completed production as an equivalent number of fully completed units. This allows production costs to be assigned fairly between completed units and closing work in progress.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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