Question

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in...

At the beginning of the month, the Forming Department of Martin Manufacturing had 10,000 units in inventory, 30% complete as to materials, and 10% complete as to conversion. During the month the department started 60,000 units and transferred 62,000 units to the next manufacturing department. At the end of the month, the department had 8,000 units in inventory, 80% complete as to materials and 60% complete as to conversion. If Martin Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Forming Department.

Multiple Choice

68,400 materials; 66,800 conversion.

58,400 materials; 56,800 conversion.

59,000 materials; 61,000 conversion.

65,400 materials; 66,800 conversion.

65,400 materials; 65,800 conversion.

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Answer #1

Equivalent units under weighted average cost method is equal to

units completed and transfered to next department + (units in closing stock * percentage of completion)

Material equivalent units = 62000 units completed & transferred + 8000 * 80%

= 62000 units + 6400 equivalent units = 68400 units

Conversion = units completed & transfered + (units in closing stock* Percentage of completion)

= 62000 units + 8000*60% = 62000+4800 = 66,800 units

option A is the correct answer

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