Question

Which of the following statements is (are) true regarding product costing?(A) Twenty cans of paint that are 25% full are equivalent to four cans of paint that are completely full.(B) The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units. A. Only A is true.B. Only B is true.C. Both A and B are true.D. Neither A nor B is true.

Answer 1

Answer:

B is the correct option.

Explanation:

Product costing refers to the cost incurred for creating a product. It includes the materials, labor, factory overhead and consumable production supplies. It can also be defined as the labor cost required for delivering the service and in this case, its cost also includes the costs related to compensation, payroll taxes, and employee benefits. The cost of a product on a unit basis is calculated by adding the cost of total direct labor, materials, consumable supplies and total allocated overhead divided by the total number of units.