ECONOMICS

Detailed explanation-1: -The weighted-average method of computing equivalent units is the most widely used method in practice. There are no units in process at the beginning of the period, 1, 500 units in process at the end of the period that are 40% complete, and 15, 000 units transferred out during the period.

Detailed explanation-2: -Equivalent units = number of physical units × percentage of completion. Units completed and transferred out are 100 percent complete. Thus equivalent units are the same as the physical units. Equivalent units = number of physical units × percentage of completion.

Detailed explanation-3: -Equivalent units is a cost accounting concept that is used in process costing for cost calculations. It has no relevance from an operational perspective, nor is it useful for any other type of cost derivation other than process costing.

Detailed explanation-4: -In a weighted average, each data point value is multiplied by the assigned weight, which is then summed and divided by the number of data points. For this reason, a weighted average can improve the data’s accuracy. Stock investors use a weighted average to track the cost basis of shares bought at varying times.

Detailed explanation-5: -In the weighted average cost method, the cost of goods available for sale is divided by the number of units available for sale and is commonly used when inventory items are so melded or identical to each other that it is impossible to assign specific costs to single units.