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Ideally, an organization only wants to build forward integrations.
Equivalent Units
A concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units that could have been produced with those costs.
Direct Materials
Materials in their unprocessed state that can be directly linked to the production of a particular item.
Equivalent Unit
A concept in cost accounting that converts the amount of work done on incomplete units of production to an equivalent number of fully completed units.
Conversion Costs
Costs incurred during the manufacturing process to convert raw materials into finished goods, composed of direct labor and manufacturing overhead.
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