ECONOMICS

Detailed explanation-1: -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-2: -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-3: -Process costing requires partially completed units in ending work-in-process inventory to be converted to the equivalent completed units (called equivalent units). Equivalent units. are calculated by multiplying the number of physical (or actual) units on hand by the percentage of completion of the units.

Detailed explanation-4: -A cost per equivalent unit is defined as the sum of the costs added this period and the beginning work in process costs divided by the equivalent units. Equivalent units are a theoretical number of units a company could have made with a given amount of material, labor, and manufacturing overhead.