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In numerous industries all materials needed for the product are put in process in the first department. However, additional materials might also be required in subsequent departments in order to complete the units.
The addition of such materials
has two possible effects on units and costs in process
1. The additional materials
merely increase the unit cost since these materials become a part of the
product manufactured and do not increase the number of final units. For
example, in a finishing plant of a textile company, the material added is often
a bleach; in a wire company, a plating mixture; in an automobile assembly
plant, additional parts. These materials are needed to give the product certain
specified qualities, characteristics, or completeness.
2. The
added materials increase the number of units and also cause a change in unit
cost. In processing a chemical, water is often added to the mixture causing an
increase in the number of units and a spreading of costs over a greater number
of units.
