Question

When 1,000 units are 60% complete in a process, it is equivalent to ________ completed units.

• A. 60
• B. 600
• C. 6,000
• D. 1,000

Answer 1

The correct option is B 600

Equivalent units concept is used in contract costing. When number of units are not 100% completed, to carry over to the next process, cost of work in progress will be identified on the basis of % of completion. Basically the number of units are calculated based on their % completion.

In the given situation, % of completion is 60% of 1000 units. Therefore 600 units are to be considered as equivalent units.