Question

1. The Townsend Tractor Company manufactures small garden tractors on a highly automated assembly line. Its costing system uses two cost categories, direct materials and conversion costs. Each tractor must pass through the Assembly Department and the Testing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production. Townsend Tractor uses weighted-average costing.

Data for the Assembly Department for April 20X8 are:
Work in process, beginning inventory	400 units
Direct materials (100% complete)
Conversion costs (40% complete)
Units started during April	1,200 units
Work in process, ending inventory	250 units
Direct materials (100% complete)
Conversion costs (80% complete)
Costs for April 20X8
Work in process beginning inventory:
Direct materials	$230,000
Conversion costs	$220,000
DM costs added during June	$700,000
Conversion costs added during June	$1,175,000

What are the equivalent units for direct materials and conversion costs, respectively, for April?

1. 1,600 units; 1,550 units
2. 1,350 units; 1,350 units
3. 250 units; 200 units
4. 1,850 units; 1,690 units
5. None of the above

Answer 1

Correct answer------------(A) 1,600 units; 1,550 units

Working

Reconciliation of Units
A	Beginning WIP	400
B	Introduced	1,200
C=A+B	TOTAL	1,600
D	Transferred out (1600-250)	1,350
E=C-D	Ending WIP	250

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	1,350			100%	1,350	100%	1,350
Ending WIP	250			100%	250	80%	200
Total	1,600			Total	1,600	Total	1,550