Comfy Couch Co. has completed its monthly inventory count for sectional couches and recorded the following information for ending inventory: 500 units 100 percent complete, 400 units 60 percent complete, and 100 units 10 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 Comfy Couch Co.
2. Explain the inaccuracies in unit cost if 1,000 units are used.