Explain the concept of equivalent units. Give an example to validate your explanation.
What will be an ideal response?
Equivalent units are a measure of the amount of work done during a production period, expressed in terms of fully completed units of output. If 40,000 units were started and completed, then the equivalent units would equal 40,000 units. However, if those same 40,000 units were started and only 50% complete, then the equivalent units would be 40,000 × 50% = 20,000 units.
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