The correct answer is: B. equivalent units.
Equivalent units are a measure of the work done during a period on all the units that were started and that were either completed or partially completed during the period. They are used to calculate the cost per unit of production.
To calculate equivalent units, we need to know the following:
- The number of units started and completed during the period.
- The number of units that were started but not completed during the period.
- The percentage of completion of the units that were started but not completed.
Once we have this information, we can calculate equivalent units as follows:
- Units started and completed x 100% = Equivalent units of work done for units started and completed
- Units started but not completed x Percentage of completion = Equivalent units of work done for units started but not completed
The total equivalent units of work done is the sum of the equivalent units of work done for units started and completed and the equivalent units of work done for units started but not completed.
Equivalent units are used to calculate the cost per unit of production. The cost per unit of production is calculated as follows:
Total cost of production / Equivalent units of work done
The cost per unit of production is used to value the units that were completed during the period and the units that were in process at the end of the period.