Question

Step 2: Compute output in terms of equivalent units

First consider the 40,000 masks that were completed and transferred out to the inception department during October.
Fully completed = 100% complete with respect to both
DIRECT MATERIALS &
CONVERSION

Answer 1

Step 2: Compute output in terms of equivalent units is a process used in managerial accounting to determine the number of completed units that could have been produced given the amount of input used.

Step-by-step explanation:

Step 2: Compute output in terms of equivalent units is a process used in managerial accounting to determine the number of completed units that could have been produced given the amount of input used. In this case, we are considering the 40,000 masks that were completed and transferred out to the inception department during October. Since these masks are fully completed, they can be considered 100% complete in terms of both direct materials and conversion.

When discussing Step 2: Compute output in terms of equivalent units, we look at the 40,000 masks completed in October and recognize that they represent a full workload in terms of both materials and conversion effort, simplifying the computation of costs for these items. However, if we had to consider partially completed items, the calculation would be more complex, requiring a weighting of the degree of completion for each cost component.