 Hello, in this presentation we will define equivalent units of production EUP. According to fundamental accounting principles, while the 22nd edition, the definition of equivalent units of production EUP is number of units that would be completed if effort during a period had been applied to units that were started and finished. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical, reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. When considering the equivalent units, we can think of a calculation and we're thinking about the calculation in terms of materials and conversion. So we can think of an idea of having total units, some of those completed, some of those not completed and then an idea of what would the equivalent units then be. So if we had beginning working process, units started and completed, ending working process and total units broken out in this format representing all units that would then be started and completed. We can then think about well which of those units would be started and completed or how complete are they in terms of materials and how complete are they in terms of conversion meaning how complete are they in terms of equivalent units for materials and equivalent units for conversion and a first in first out method we would say that the 3000 units that were in the beginning, none of that was done during the process here meaning none of the equivalent unit costs happened during this particular month because they happened last month. The ones that were in terms of the conversion then we're going to come up with some type of conversion, this percentage being the amount of conversion that was done during this time period so that 3000 times the 60 gives us the equivalent units of conversion, the direct labor and the overhead applied, those being the conversion costs then we're going to have the items started and completed. The reason we're breaking them out in this format is that we can get this started and completed unit and those units we know that are completed 100% in terms of materials and 100% in terms of conversion because they were started and completed. Then we have the ending units we know that if we are ending inventory and we're using a FIFO method then we're going to say 100% of those items were started in terms of material for equivalent units but we only have partially done the conversion so they're still in process in terms of materials but in terms of equivalent units for conversion only partially done and that would give us the equivalent units for the conversion. Then if we were to add these up we would say this is the total units we're talking about 24,600 but some of those are not complete. How complete are they in terms of direct materials? Well instead of the 24,600 we only have the 21,600 equivalent units always being less than the total and then we could say well of the 24,600 total units we are accounting for we only have 22,920 in terms of equivalent units for the conversion costs.