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?

Requirement:

1. Determine the equivalent units of production for Premium Bed Manufacturing.
2. Discuss the consequences of using 1,000 units to calculate unit cost.