Question

A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units.
At the end of the period, 22,000 units were in the ending Work in Process inventory and are 75% complete.

Compute the number of equivalent units produced by the department.

Select one:

a. 181,500.

b. 165,000.

c. 173,500.

d. 145,000.

e. 187,000.

Answer 1

Answer:

c. 173,500.

Explanation:

If the department completed and transferred 165,000 units, it started and finished 145,000 new units in addition to completing the remaining 60% of the 20,000 unfinished units in the beginning of the period. Aside from that, it also produced 75% of 22,000 additional units.

Using the weighted average method for inventory costing, the number of equivalent units produced by the department is:

$N = 145,000 +(0.60*20,000)+(0.75*22,000)\\N=173,500$

The department produced 173,500 units.