ECONOMICS

Detailed explanation-1: -If 20, 000 units of materials enter production during the first year of operations, 12, 000 of the units are finished and 8, 000 are 25% incomplete, the total equivalent units of production would be 14, 000.

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: -Equivalent units for a process costing system using the FIFO method would be equal to: a. units completed during the period, plus equivalent units in the ending work in process inventory.

Detailed explanation-4: -To calculate the goods transferred out, simply take the units transferred out times the sum of the two equivalent unit costs (materials and conversion) because all items transferred to the next department are complete with respect to materials and conversion, so each unit brings all its costs.

Detailed explanation-5: -To calculate cost per equivalent unit by taking the total costs (both beginning work in process and costs added this period) and divide by the total equivalent units.