Asked by Sadie Brown on May 22, 2024
Verified
Explain the concept of equivalent units. Give an example to validate your explanation.
Equivalent Units
A concept in costing used to allocate production costs between completed units and units still in process, by converting work in process into the number of completed unit equivalents.
- Clarify the notion of equivalent units as it pertains to process costing and demonstrate through examples how it is applied.
Verified Answer
JD
Jaideep DhillonMay 26, 2024
Final Answer :
Equivalent units are a measure of the amount of work done during a production period, expressed in terms of fully completed units of output. If 40,000 units were started and completed, then the equivalent units would equal 40,000 units. However, if those same 40,000 units were started and only 50% complete, then the equivalent units would be 40,000 × 50% = 20,000 units.
Learning Objectives
- Clarify the notion of equivalent units as it pertains to process costing and demonstrate through examples how it is applied.
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