The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.

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Mohd Afnan Abdullah · Accepted Answer

Final Answer : True, Explanation :  This statement represents the basic equation of manufacturing accounting, which is commonly known as the production equation or the work-in-process equation. It ensures that the quantity of goods manufactured during a specific period is properly accounted for in terms of input, output, and inventory levels. By balancing the units in beginning work in process inventory with the units started into production, the equation determines the total units that were available for processing. This amount should match the total units that were either completed and transferred out of the department or left unfinished in ending work in process inventory. In this way, the equation helps to identify any discrepancies or inefficiencies in the production process and provides valuable information for cost management and control.

The units in beginning work in process inventory plus the units started into production must equal the units transferred out of the department plus the units in ending work in process inventory.

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