Equivalent Unit (EQU)

1. An equivalent unit is the amount of work expressed in completed units of a product. For example, if 1,000 units are 80 percent complete as to direct material, direct labor, and manufacturing overhead, there are 800 equivalent units of production. Normally, however, there will be a different number of equivalent units for direct material, direct labor, and manufacturing overhead. For equivalent unit calculations, transfers in from previous departments are assumed to be 100 percent complete. Materials may be added either at the beginning or the end of the process in a particular department as is stated in the question. See also process costing. A measure of the physical quantities of inputs necessary to produce output of one fully complete unit.