Read the Chapter 4 Introduction, and then click "Next Section" to read section 4.1. In this section, you'll read about the example of Desk Products Inc., which mass produces wood desks. It maintains an advantage over its competitors by producing one desk in large quantities: 4,000 to 8,000 desks each month. Changes in the market are causing the CEO to be diligent about keeping costs as low as possible. The most efficient method to respond to this concern is to use process costing. As you read this chapter, pay attention to how department costs are allocated based on the concept of equivalent units.
Pay close attention to the production cost report and the information it gives the CEO. How does this improve her management decision making?