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Explain the notion of equivalent units of production (EUP).

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Explain in simple terms the notion of equivalent units of production(EUP). Why is it necessary to use EUP in process costing?

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Solution Summary

This is a typically difficult concept and this discussion boils it down and gives you an example to try to create a picture in your mind.

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Equivalent units are the amount of resources required to complete a full unit. It is used when batches or a process is stopped prior to completion and it is necessary to figure out the cost per unit. You compute EUP by multiplying the number of partial ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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