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