Question

A company uses a process costing system. It's welding department completed and transferred out 100,000 units during the current period. The ending inventory in the welding department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs).
Determine the equivalent units of production for the welding department for direct materials and conversion costs assuming the weighted average method.

A. 130,000; 130,000
B. 130,000; 112,000
C. 107,500; 118,000
D. 122,500; 112,000
E. 112,500; 130,000

Answer 1

Answer:

Option D is correct

Equivalent units

Material cost  = 122, 500

Conversion cost =  112,000

Explanation:

Equivalent units = Units × degree of completion(%)

Material cost

Item                               Unit                             Equivalent units

transferred out    100,000       100,000× 100%   = 100,000

Closing inventory   30,000      30,000     75%    =   22,500

Equivalent unit                                                            122,500

Conversion cost

Item                               Unit                             Equivalent units

transferred out    100,000       100,000× 100%   = 100,000

Closing inventory   30,000      30,000  ×  40%    =   12,000

Equivalent unit                                                            112,000

Equivalent units

Material cost  = 122, 500

Conversion cost =  112,000