Managerial accountants estimate the degree of completion easier for direct material costs compared to conversion costs because the quantity of direct materials needed for a complete unit and quantity of direct materials in partially completed units are measured more accurately.

Question

Quizplus · Accepted Answer

The quantity of direct materials needed for a complete unit is typically known and can be easily measured. Additionally, the quantity of direct materials in partially completed units can be measured more accurately than the degree of completion for conversion costs, such as labor and overhead. Therefore, managerial accountants find it easier to estimate the degree of completion for direct material costs compared to conversion costs.

Managerial Accountants Estimate the Degree of Completion Easier for Direct