Question

Duran Manufacturing uses a process costing system and manufactures its product in three departments. Which of the following is NOT a way in which Duran can use the cost per unit of each process? A) Duran can look for ways to cut the costs when actual process costs are more than planned process costs. B) Duran needs to set the selling price to cover the costs of making the product and provide a profit. C) Duran can only use the cost per unit of each process if all units are fully completed at the end of the accounting period. D) Duran needs to know the ending balances in the following accounts: Work-In-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.

Answer 1

The cost per unit of each process is a valuable metric for Duran Manufacturing to analyze and control its costs.

Step-by-step explanation:

The correct answer is C) Duran can only use the cost per unit of each process if all units are fully completed at the end of the accounting period.

The cost per unit of each process is a valuable metric for Duran Manufacturing to analyze and control its costs. However, this metric can only be valid if all units are fully completed, as the cost per unit is calculated by dividing the total cost of the process by the number of completed units.

Therefore, option C, which suggests that Duran can only use the cost per unit if all units are fully completed, is NOT a way in which Duran can use the cost per unit of each process.

Answer 2

C) Duran can only use the cost per unit of each process if all units are fully completed at the end of the accounting period.

Step-by-step explanation:

Duran uses cost accounting technique to identify cost per unit for its products. The costing techniques allows us to identify the cost of unit that are not completely finished. It is not necessary that all unit must be completed in order to find out the cost per unit of the product. The process costing is the best method to identify cost per unit for products that are in process.