Question

Watertime inc. manufactures old fashioned grandfather clocks. The production utilizes a highly automated assembly line. The firm has identified two cost categories: direct materials and conversion costs. During the production process each clock moves first through the Assembly Department, where materials are added and the clock is assembled, then through the Testing Department, where the clock is inspected for quality control. All direct materials are added at the beginning of the production process but conversion costs are allocated evenly throughout production. Spartans Inc. uses weighted-average costing.

Data for Department A for June 2020 are:

       Beginning WiP Inventory                   320 units

          Direct Materials (100% complete)

            Conversion (35% complete)

       Units started during June                                        750 units

       Ending WiP Inventory June 30       300 units

          Direct Materials (100% complete)

            Conversion (65% complete)

What were the equivalent units of direct materials and conversion costs, respectively, at the end of June?

Equivalent Units for Direct Materials =

Equivalent Units for Conversion Costs =

Answer 1

compute equivalent units under weighted average method

Particular	material	conversion
Unit's completed and transferred(note below)	(770×100%) 770	(770×100%) 770
Ending inventory	(300×100%) 300	(300×65%) 195
Total equivalent units	1070	965

Units completed and transferred out = beginning + units started during the month - ENDING INVENTORY

= 320+750 - 300 = 770 units

Therefore equivalent units end of June material = 300 units

Units end of June conversion= 195 units

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