Equivalent units
Equivalent units express partially completed output as an equivalent number of fully completed units for a particular cost element. Materials and conversion may have different completion percentages, so calculate them separately. The result supports allocating process costs between completed output and work in progress under an appropriate method.
Worked example
Closing work in progress contains 200 units, all material added but conversion only 40% complete. It represents 200 equivalent material units and 80 equivalent conversion units.
Common mistake
Do not apply one completion percentage to every cost element or mistake equivalent units for the physical number of units held.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Supporting | September 2026–June 2027 |
| FIA | FMA | Supporting | September 2026–June 2027 |