ECONOMICS

Detailed explanation-1: -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-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: -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.

Detailed explanation-4: -Which are true statements about equivalent units of production? It is calculated by adding units completed and transferred to the finishing department and product of the units in process and the percent complete.

Detailed explanation-5: -Managerial and cost accountants use the equivalent units of production to allocate production costs to units during the manufacturing process. For instance, calculating the cost of goods produced is simple if there is no beginning or ending goods in process inventory.