Learning Objective 2: Understand the basic concepts of process costing and compute average unit costs
How are average unit costs computed when no inventories are present?
When no inventories are present, this means that 100% of conversion was completed in this period for 100% of units produced in this period. In other words, average unit costs is a simple average of Direct+Indirect Costs of production (Direct Materials+Conversion Costs) and the # of units made.
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