Determine equivalent units of the product, Cost Accounting

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Determine Equivalent Units of the Product

Let assume there are 4,000 units of a product in ending inventory out of that 60 percent are fully complete whereas the remaining are 70 percent complete. What are the equivalent units of the product?

Solution

60% x 4,000 = 2,400 units completely complete.

40% x 4,000 = 1,120 units -Equivalent units

Net Equivalent units = 3,520 units

Assume we had net process costs of shs.7,040, after that every unit would cost shs.7,040/3,520 = shs.2

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