Supply Chain Glossary - E

Supply Chain Glossary - E

equivalent unit cost

A method of costing that uses the total cost incurred for all like units for a period of time divided by the equivalent units completed during the same time period.

A translation of inventories into equivalent finished goods units or of inventories exploded back to raw materials for period end valuation of inventories. An equivalent unit can be the sum of several partially completed units. Two units 50% completed are equivalent to one unit 100% completed.


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