Premium Bed Manufacturing has completed its monthly inventory count for king-size beds and recorded the following information for ending inventory: 400 units 100 percent complete, 350 units 60 percent complete, and 250 units 20 percent complete. The company uses a process costing system to determine unit cost. Why would unit cost be inaccurate if 1,000 units were used to determine unit cost?

Sovereign Sofa Manufacturing has completed its monthly inventory count for recliners and recorded the following information for ending inventory: 800 units 100 percent complete, 200 units 70 percent complete, and 150 units 30 percent complete. The company uses a process costing system to determine unit cost. Why would unit cost be inaccurate if 1,150 units were used to determine unit cost?

Requirement:

1. Calculate the equivalent units of production for Sovereign Sofa Manufacturing.
2. Explain why using 1,150 units to determine unit cost would be misleading.