If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, the equivalent units of direct labor in beginning Work in Process are 20,000. a. trueb. false

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Business

Smarty

4 April, 03:01

If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with respect to direct labor, the equivalent units of direct labor in beginning Work in Process are 20,000. a. trueb. false

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Rhodes · Answer 1

The correct answer is True

Explanation:

In calculating the equivalent units with respect to labor, the physical units at the start of the period is multiplied by the percentage of completion.

In other words, the equivalent units is shown thus:

Equivalent units = 100000 units*20%

Equivalent units = 20000 units

This implies that labor has carried out 20% of the work required to transform the 100000 units into finished products, since only 20% work is completed, the remaining 80% is expected in the next period.