The production department in a process manufacturing system completed 80,000 uni

Question

The production department in a process manufacturing system completed 80,000 units of product and transferred them to finished goods during a recent period. Of these units, 24,000 were in process at the beginning of the period. The other 56,000 units were started and completed during the period. At period end, 16,000 units were in process. Compute the departments equivalent units of production with respect to direct materials under each of three separate assumptions, using the weighted average method:                              
                  
1. All direct materials are added when processing begins                              
2. Beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 75% complete as to materials and conversion costs

3. Beginning inventory is 60% complete as to materials and 40% complete as to conversion costs. Ending inventory is 30% complete as to materials and 60% complete as to conversion costs.   

Explanation / Answer

1) Statement of Equivalent production Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent mat Opening WIP              24,000.00 100%                 24,000.00              24,000.00 100%                 24,000.00 Units started and completed              56,000.00 100%                 56,000.00              56,000.00 100%                 56,000.00 Closing WIP              16,000.00 100%                 16,000.00              16,000.00 50%                    8,000.00 Equivalent Units                 96,000.00                 88,000.00 Note: Assumed Closing WIP is 50% complete wrt Conversion 2) Statement of Equivalent production Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent mat Opening WIP              24,000.00 100%                 24,000.00              24,000.00 100%                 24,000.00 Units started and completed              56,000.00 100%                 56,000.00              56,000.00 100%                 56,000.00 Closing WIP              16,000.00 75%                 12,000.00              16,000.00 75%                 12,000.00 Equivalent Units                 92,000.00                 92,000.00 3) Statement of Equivalent production Particulars Direct Materials %completion Equivalent mat Conversion %completion Equivalent mat Opening WIP              24,000.00 100%                 24,000.00              24,000.00 100%                 24,000.00 Units started and completed              56,000.00 100%                 56,000.00              56,000.00 100%                 56,000.00 Closing WIP              16,000.00 30%                    4,800.00              16,000.00 60%                    9,600.00 Equivalent Units                 84,800.00                 89,600.00

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