ECONOMICS

Detailed explanation-1: -The equivalent units of production is the sum of units completed and transferred out and the equivalent units of ending work in process inventory (5, 000 units X 60%) or 20, 000 + 3, 000 = 23, 000 units. Equivalent units of production measure the amount of work that should be completed during a period.

Detailed explanation-2: -Equivalent units describe how much work has been done on a certain number of physical items. 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).

Detailed explanation-3: -Equivalent units of production are equal to: The number of units that could have been started and completed given the costs incurred during the period.