Question

Bims Corporation uses the weighted-average method in its process costing system. The Assembly Department started the month with 2,600 units in its beginning work in process inventory that were 70% complete with respect to conversion costs. An additional 62,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending work in process inventory of the Assembly Department that were 60% complete with respect to conversion costs. What were the equivalent units for conversion costs in the Assembly Department for the month?

Answer 1

Answer:

Total equivalent units 56,700

Explanation:

Equivalent Units E.U) are notional whole units which represent incomplete work and are used to apportion costs between between work in progress and completed work.

To compute as  

Equivalent Units = Degree of completion (%) × units

We will assume the company uses weighted average method of accounting for work-in progress.

Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.

Completed units = opening inventory + transferred in - closing inventory

                           = 2,600 + 62,500 - 21,000 = 44,100

Items                        Units                                         Equivalent unit

Completed units    44,100          44,100× 100% =    44,100

Closing inventory   21,000        21,000 ×60% =      12,600

Total equivalent units                                               56,700