Question

Pureform, Inc., manufactures a product that passes through two departments. Data for a recent month for the first department follow:
The beginning work in process inventory was 80% complete with respect to materials and 60% complete with respect to labor and overhead. The ending work in process inventory was 75% complete with respect to materials and 50% complete with respect to labor and overhead.
Assume that the company uses the weighted-average method of accounting for units and costs.
(a) Compute the equivalent units for the month for the first department.

Answer 1

The equivalent units for the month for the first department for material is 48,000 and for labor and overhead 46000.

What is the weighted average ?

• One of three methods for valuing the stock in your company's inventory is the weighted average cost method, which establishes the average cost of all the products in your inventory based on their individual costs and the quantity of each item that is kept on hand.
• The weighted average is used by businesses to calculate the amount that goes into inventory and the cost of products sold (COGS).
• Due to the variety of inventory stock kinds or the same stock items being purchased at various times, a firm may pay varying costs when purchasing pieces of inventory.

Total units transferred = 42000

and, units of ending WIP = 6000(material),  4000(Labor),  4000(overhead)

So,

Equivalent units of production = 48000(material), 46000(Labor),  46000(overhead)

The equivalent units for the month for the first department for material is 48,000 and for labor and overhead 46000.

Learn more about weighted average here:

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