In the same time period,it is possible that a production department can produce 1,000 equivalent finished units with respect to direct materials and 800 equivalent finished units with respect to direct labor.

Equivalent Finished Units

A calculation in cost accounting that converts partially completed goods into a number of complete units for inventory costing purposes.

Direct Labor

The cost of wages for workers directly involved in the manufacturing or production of goods.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are considered variable costs.