Equivalent units

Equivalent units convert partially completed units in a process into a notional number of fully finished ones, allowing period costs to be spread fairly across completed output and closing work-in-progress in process costing.

ByHoang TruongUpdated June 30, 2026

FrameworkProcess costing

See it move

Loading infographic...

At period end, 2,000 units are fully complete and 500 units are 60% complete, contributing 300 equivalent units, since 500 times 0.60 equals 300. Together they total 2,300 equivalent units. Dividing the period's €46,000 cost by 2,300 gives a cost per equivalent unit of €20, used to value both finished output and closing work-in-progress.

Where it fits

SubjectCost AccountingCoreTopicJob & Process CostingCoreTopicJoint Products, By-Products & SpoilageCore

The formula

LaTeX

EU = Q_{complete} + Q_{partial} \times c

Variables

$E U$: Equivalent units of production for the period (equivalent units)
$Q_{c} o m pl e t e$: Number of fully completed units (units)
$Q_{p} a r t ia l$: Number of partially completed units still in work-in-progress (units)
$c$: Degree of completion expressed as a decimal (e.g. 0.60 for 60%) (—)

Converts a mix of complete and partial output into a single comparable measure

LaTeX

\text{Cost per Equivalent Unit} = \frac{\text{Total Process Cost}}{\text{Total Equivalent Units}}

Variables

$T o t a l P r ocess C os t$: All costs charged to the process in the period (€)
$T o t a l E q u i v a l e n t U ni t s$: Equivalent units calculated above (equivalent units)

Unit cost used to value both completed output and closing work-in-progress

Check yourself

PracticeCORE

A process costing system ends the period with 3,000 fully completed units and 800 units that are 50 per cent complete with respect to conversion costs. What is the total number of equivalent units for conversion costs?

Select an answer to check your understanding.