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Equivalent units of production: a new look at an old issue

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This paper focuses on the determination of the cost completion rate used to calculate the
equivalent units of production in a continuous process costing system. The paper aims at two research
questions. What procedures do companies utilize in practical terms? How should the completion level
percentage be calculated conceptually?
Design/methodology/approach – The study is a qualitative exploratory survey. The companies
targeted were those noted in “Melhores e Maiores,” a ranking of the best and biggest Brazilian
companies. A total of 175 questionnaires were sent to pre-selected enterprises, each with revenues of
more than US$100 million per year, and 50 usable responses were returned.
Findings – A literature review of the theoretical procedures used for continuous process costing
revealed no indication of an objective method for determining the completion level. The empirical
research in the present study confirmed that, in practice, companies do not adopt the general
procedures proposed by the theory. The best practices applied by the companies have been shown to
be an adequate alternative, because the results are identical to those obtained with the proposed
method.
Research limitations/implications – The study bears the usual limitations of a qualitative
exploratory survey regarding its generalization to other companies.
Originality/value – The originality of the study is based on the assumption that cost accounting
theory does not offer an objective solution for the computation of the completion level percentage and,
consequently, that companies in continuous process production system do not adopt the theoretical
concepts with respect to inventory evaluation of goods-in-process and finished goods.

Keywords Cost accounting, Costs, Production management, Brazil

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Informasi Detail

Judul Seri

Managerial Auditing Journal

No. Panggil

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Penerbit

: Emerald Group., 2006

Deskripsi Fisik

Managerial Auditing Journal Vol. 21 No. 3, 2006

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

Lampiran Berkas

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