The correct answer is: D. Both A and C
Equivalent units represent the production of a process in terms of both completed and semi-finished units. This is because equivalent units take into account the work that has been done on partially completed units, as well as the work that has been done on completed units.
For example, let’s say that a company produces widgets. In a given period, the company starts with 100 units of material, completes 80 units, and has 20 units that are 50% complete. The equivalent units of production for the period would be 100 + (20 * 0.5) = 110 units.
The 100 units that were completed are equivalent to 100 units because they are fully finished. The 20 units that are 50% complete are equivalent to 10 units because they are half-finished. Therefore, the total equivalent units of production for the period is 110 units.
Equivalent units are used in process costing to calculate the cost of goods manufactured and the cost of goods sold. They are also used to calculate the cost per equivalent unit, which is used to value inventory and to determine the cost of goods sold.