Question

Equivalent Units Calculations—Weighted Average Method

Terrace Corporation makes an industrial cleaner in two sequential departments, Compounding and Drying. All material is added at the beginning of the process in the Compounding Department. Conversion costs are added evenly throughout each process. Terrace uses the weighted average method of process costing. In the Compounding Department, beginning work in process was 2,000 pounds (60% processed), 34,000 pounds were started, 32,000 pounds were transferred out, and ending work in process was 70% processed.

Calculate equivalent units for the Compounding Department for August 2016.

Terrace Corporation Flow of Units and Equivalent Units Calculation, August 2016
		Equivalent Units
		% Work done	Direct Materials	% Work Done	Conversion Costs
Complete/Transferred	Answer	Answer %	Answer	Answer %	Answer
Ending Inventory	Answer	Answer %	Answer	Answer %	Answer
Total	Answer		Answer		Answer

Answer 1

UNITS TO ACCOUNT FOR:
Beginning Work in Process units					2,000
Add: Units Started in Process					34,000
Total Units to account for:					36,000
UNITS TO BE ACCOUNTED FOR:
Units completed and transferred out					32,000
Ending Work in Process					4,000
Total Units to be accounted for:					36,000
Equivalent Units:
			UNITS	Material Cost		Conversion
				% Completion	Units	% Completion	Units
Units completed and transferred out			32000	100%	32,000	100%	32,000
Ending Work in Process			4000	100%	4,000	70%	2,800
Total Equivalent units			36000		36,000		34,800