Enter the total material costs for the beginning work in process inventory, costs added this period, and the total equivalent units into the calculator to determine the cost per equivalent unit.

Cost Per Equivalent Unit Formula

The following equation is used to calculate the Cost Per Equivalent Unit.

CPEU = (BWIP + CAP) / EU

  • Where CPEU is the cost per equivalent unit ($/equivalent unit)
  • BWIP is the beginning work in process inventory costs ($)
  • CAP is the costs added this period ($)
  • EU is the number of equivalent units

What is Cost Per Equivalent Unit?

Definition:

A cost per equivalent unit is defined as the sum of the costs added this period and the beginning work in process costs divided by the equivalent units.

Equivalent units are a theoretical number of units a company could have made with a given amount of material, labor, and manufacturing overhead.

How to Calculate Cost Per Equivalent Unit?

Example Problem:

The following example outlines the steps and information needed to calculate Cost Per Equivalent Unit.

First, determine the beginning work in process costs. In this example, the BWIP costs are found to be $500.00

Next, determine the added costs for this period. This period incurred additional costs of $1,000.00.

Next, determine the number of equivalent units. The number of equivalent units in this example is 100.

Finally, calculate the cost per equivalent unit using the formula above:

CPEU = (BWIP + CAP) / EU

CPEU = ($1000 + $500) / 100

CPEU = $15/equivalent unit