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Managerial Accounting

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Purpose of Equivalent Units Computation

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What is the purpose of the equivalent-unit computation in process costing problems?

A

To separate material costs from conversion costs in assigning costs to work in process, finished goods and cost of goods sold.

B

To predict the average cost per unit of items made in large batches which are identical to each other.

C

To spread the cost incurred during the period to the work effort in fully completed units.

D

To comply with generally accepted accounting principles rule to report work in process as equivalent units.