Question

Box Company uses a process costing system. It had beginning inventory of 1,600 units which were...

Box Company uses a process costing system. It had beginning inventory of 1,600 units which were 30% complete as to materials and 50% complete as to conversion. There were 4,000 units started this period. The ending inventory of 2,000 units were 50% complete as to materials and 80% complete as to conversion. Using the weighted average method, Equivalent Units for conversion would be _____.

Group of answer choices

A) 3,480

B) 4,120

C) 4,600

D) 5,200

E) 4,400

Business   Accounting   
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Homework Answers

Answer #1

The correct option is D i.e. 5,200

Solution:

Under the weighted average method, equivalent units are calculated based on 2 things: units completed & transferred out and units in ending work in process inventory.

  • Units completed and transferred are finished units and will always be 100% complete for equivalent unit calculations
  • For units in ending work in process, we would take the units unfinished multiply by percentage complete.

Therefore,

Equivalent units for conversion is equal to:

Units Completed & Transferred = 3,600 (1,600 + {4000 - 2000}#)

Units in ending WIP = 1,600 (2,000 * 80%)

Toatl Equivalent Units = 5,200 units

#:Units Completed & Transferred = Opening WIP + Units introduced and completed (Total units introduced - Closing units)

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