Equivalent Unit

• Number of units in relation to given percentage e.g. opening work-in-progress 5000 units valued at $15,000 with a degree of completion being materials 100%, labor 80% and overheads 75%. The balance equivalent units to be completed will then be:
• Materials: Nil
• Labor:20/100 x 5,000 = 1,000
• Overheads:25/100 x 5,000 =1,250

Waste

• The loss incurred during the process

Abnormal Loss

• Is the difference between actual loss and normal loss where actual loss is greater than the normal loss provided for.

By-Product

• The product generated in the process of producing the main product e.g. groundnut chunks are generated in the process of producing groundnut oil

Joint Costs

• The cost that is incurred together in the process of producing the main product

Split-Off Point

• The point at which the output is split into different varieties e.g after Process 1 and Process 2, there are 2 products as shown.
• Process 1 & Process 2 à Output, 300 kg split into Product A,200kg and Product B,100kg

Scrap

• The loss that is sold as scrap. The scrap value is always very low in comparison with the cost.

Degrees Of Completion

• The percentage of units completed e.g. closing work-in-progress-materials 100%, labor 70% and overheads 50%

Notional (Or Net) Sales Value

• The sales value after deducting the sale of scrap

Joint Products

• Products that are jointly produced in the process of producing the main product

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