summarize flow of output
compute output in units
summarize total costs
compute cost for each equivalent unit
Answer is Right!
Answer is Wrong!
The correct answer is: D. compute cost for each equivalent unit
In process costing, the third step is to compute the cost for each equivalent unit. This is done by dividing the total costs incurred during the period by the equivalent units produced during the period. The equivalent units produced are the units that have been completed and transferred to the next department, plus the units that are still in process at the end of the period.
The cost per equivalent unit is used to value the units in ending inventory and to cost the units transferred to the next department.
The other options are incorrect because:
- Option A is the first step in process costing.
- Option B is the second step in process costing.
- Option C is the fourth step in process costing.