ECONOMICS

Detailed explanation-1: -Equivalent Units=Units × % completion. Equivalent Units = Units × % completion . The percentage of completion is estimated on the basis of factors of production used. For example 50% of direct materials used so 50% of completion etc.

Detailed explanation-2: -To simply calculate equivalent units, you can multiply the number of physical items by the percentage of the work done on them. For two items that are 50% done, you would have one equivalent unit (2 x 50% = 1). When the items are completely finished, the number of equivalent units is equal to the physical items.

Detailed explanation-3: -An equivalent unit of production is an expression of the amount of work done by a manufacturer on units of output that are partially completed at the end of an accounting period. Basically the fully completed units and the partially completed units are expressed in terms of fully completed units.

Detailed explanation-4: -It is the number of completed units of an item that a company could theoretically have produced, given the amount of direct materials, direct labor, and manufacturing overhead costs incurred during that period for the items not yet completed.