Unfinished units of production that remain in a process at the end of a period as work in progress (or process). Degrees of completion are assigned to each cost classification, which, when applied to the number of units in work in progress, give an equivalent number of completed units. The equivalent units have an impact on the valuation of opening and closing work in progress.
A company has 3000 units of work in progress: expenditure on direct materials is 100% complete but expenditure on direct labour and overheads is judged to be only 50% complete. The equivalent units are given in the table.
work in progress (units)
degrees of completion (%)