Question

Which of the following is FALSE about computing equivalent units under the weighted average method? a....

Which of the following is FALSE about computing equivalent units under the weighted average method?

a.

Equivalent units are computed for ending work in process inventory and units and transferred to the next department, but not for beginning work in process inventory.
b.

Units transferred to the next department are always considered 100% complete.
c.

Equivalent units are roughly equal to the number of complete units that could have been made from the same level of materials and effort that went into the units partially complete.
d.

Units started during the period are always considered 100% complete.
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Answer #1

Option D is the answer!!

1. Correct, In this method cost incurred on opening stock will be considered in calculation of average cost, while equivalent units are being calculated for finished goods and closing stock. Therefore equivalent units are not being calculated for opening stock.

2. Correct, units are transferred to another department when 100% done.

3. Correct, equivalent units means number of completed units that can be made out of material used in partially completed units.

4. Incorrect, opening stock may or may not be 100% complete.

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