Amanda,
Here are some thoughts that might be helpful.
Equivalent units
The "equivalent unit" concept you described is different from the historical use of that term in the accounting discipline. Some references on the historical accounting use include:
Ø Equivalent Units Of Production - What It Is, Example, Calculation
Ø Equivalent units of production definition - AccountingTools - Process costing
Ø What are Equivalent Units of Production? - Definition | Meaning | Example
Ø Many YouTube Videos – here is one of many https://www.bing.com/videos/riverview/relatedvideo?q=eup+accounting&mid=43B9DF344BE4A824380C43B9DF344BE4A824380
In summary, the equivalent units term is used in process costing environments, where nearly identical items are produced in a continuous process, such as jars of mayonnaise. The concept would look at Work-in-Process at a point in time, saying that these units are 1/3 complete in terms of labor but 80% in terms of material. Based on that, the "earned" usage of material and labor would be calculated and compared to pre-existing standards for those items to measure performance in terms of labor and material usage. Before becoming a Professor of Accounting, I worked in process cost environments. I designed the cost systems never to have a Work-in-Process (WIP) inventory. Can you imagine hundreds of partially completed jars of mayonnaise sitting in inventory? I cannot. So, inventory in the systems I designed and installed was either not started at all or finished goods.
Your context
Your post did not describe the product or production process, so in that context, there may be significant WIP at the end of an accounting period. Your description suggests that the company is seeking labor hours standards for production to use in a benchmarking exercise. If the people who designed the bench-marking system had had a background in cost accounting or consulting accounting references, the term confusion might not exist.
Required basic data
No matter how the information is used, "standard cost" data is needed to determine the "standard" time (labor hours per unit or units per labor hour) to complete a unit. Material standards could also be managed this way, based on the bill of materials.
How are standard times developed?
Several ways exist, but the goal of these ways is to gain acceptance from the parties involved so that the standard is appropriate and not too easy or too hard to achieve. To study this, consider:
Ø Historical performance
Ø Committee opinions
Ø Engineering studies – but the answer is not just machine speed. These standards might be called theoretical standards. However, even machines have downtime and need setups. Probably you want practical people's time. People need breaks and have meetings to attend.
Who maintains the official standard times?
Process engineering standards are common in US industries and describe how an item is made. They are usually coded with my part number or item number. A process engineering department maintains these standards. The standard time could be recorded and accessed from such a system. The bill of material for assembled parts would also be managed in such a system.
Harmonization
These times should be widely used in production planning and inventory control systems, which might be part of a more extensive enterprise resource planning system (ERP).
Reporting
Since the content of the benchmarking system was not provided, I cannot comment on that. However, variance from standard expressed in percentage terms broken down by department, machine, and operator would be effective and straightforward to understand. The reports would come from the accounting area with explanations of variances coming from the operating departments.
These perspectives might be helpful.
Dr. Carroll
Professor Emeritus
Georgian Court University