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(TCO B) The Alabama Company manufactures a product that goes through three processing departments. Information relating...

(TCO B) The Alabama Company manufactures a product that goes through three processing departments. Information relating to activity in the first department during June is given below.

Percentage Completed

Units

Materials

Conversion

Work in process, June 1

75,000

75%

70%

Work in process, Jun 30

72,500

65%

45%


The department started 237,500 units into production during the month and transferred 240,000 completed units to the next department.


Required: Compute the equivalent units of production for the first department for June, assuming that the company uses the weighted-average method of accounting for units and costs.

Business   Accounting   
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Answer #1

Calculation of Equivalent units of production by Weighted Average Method

Equivalent units (Materials) = Units completed & tfd to next deptt.+(Closing WIP*Completion %)

= 240,000 units+(72,500*65%)

= 240,000 units+47,125 units = 287,125 units

Equivalent units (Conversion Costs) = Units transferred to next deptt.+(Closing WIP*Completion %)

= 240,000 units+(72,500*45%)

= 240,000 units+32,625 units = 272,625 units

Therefore equivalent units (materials) is 287,125 units and equivalent units (conversion costs) is 272,625 units.

Working Note:-

1) Total Units = Beg. WIP+Units Started

= 75,000 units+237,500 units = 312,500 units

2) Total Units = Units completed and transferred out+Closing WIP

= 240,000 units+72,500 units = 312,500 units

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