A company uses process costing and uses the weighted average method to account f

Question

A company uses process costing and uses the weighted average method to account for costs. In the third department, it had 80,000 units in the beginning work-in-process which were partially completed (25% for direct materials and 70% for conversion costs). During the month, 230,000 units were transferred in from the second department. There were 226,000 units completed and transferred out to finished goods.   At the end of the month, there were 84,000 units left which were partially completed (40% for direct materials and 85% for conversion costs).

What are the equivalent units for:

Transferred-in?

Direct materials?

Conversion costs?

Explanation / Answer

Equivalent units are calculated as under:

Transferred in Direct Material Conversion Cost Beginning Work in process 80,000 20000 56000 Transferred in 2,30,000 2,30,000 Available to use 3,10,000 Transferred out 2,26,000 2,26,000 2,26,000 Closing Work in process 84,000 33600 71400 3,10,000 Equivalent units 2,30,000 2,59,600 2,97,400

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