ECONOMICS

Detailed explanation-1: -Under the FIFO method, we will calculate equivalent units for 3 things: Units completed from beginning work in process, units started and completed this period and units remaining in ending work in process.

Detailed explanation-2: -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-3: -Equivalent units are notional whole units that are equivalent to the number of incomplete units adjusted for their stage of completion. For example, if there are 200 incomplete units in a process at the end of a period and they are 75% complete then this is equivalent to 150 (200 × 0.75) whole (complete) units.

Detailed explanation-4: -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).