Question

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department:

Units:
Beginning Inventory: 26,000 units, 100% complete as to materials and 60% complete as to conversion.
Units started and completed: 112,000.
Units completed and transferred out: 138,000.
Ending Inventory: 30,500 units, 100% complete as to materials and 25% complete as to conversion.

Costs:
Costs in beginning Work in Process - Direct Materials: $44,000.
Costs in beginning Work in Process - Conversion: $49,850.
Costs incurred in February - Direct Materials: $288,000.
Costs incurred in February - Conversion: $600,150.

Calculate the equivalent units of materials.

Answer 1

The formula for equivalent untis will be as follow:

Started and completed +

ending inventory x percentage of completion +

incomplete portion of beginning inventory

In this case the beginning inventory WIP is at 100% therefore no materials are added.

Now, we procede with the other concepts:

Started and completed 112000 units thus 100% materials

Ending Inventory 30.500 units at 100%

We simply add both figures as they are at 100%

112,000 + 30.500 = 142,500 equivalent units of materials for the month