Question

Arona Corporation manufactures canoes in two departments, Fabrication and Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe- shaped aluminum frame. The canoes are then transferred to the Waterproofing department to be coated with sealant. Arona uses a weighted-average process cost system to collect costs in both departments.
All materials in the Fabrication Department are added at the beginning of the production process. On July 1, the Fabrication Department had 30 canoes in process that were 20% complete with respect to conversion cost. On July 31, Fabrication had 20 canoes in process that were 40% complete with respect to conversion cost. During July, the Fabrication Department completed 74 canoes and transferred them to the Waterproofing Department.

What are the Fabrication Department's equivalent units of production related to materials for July?

Multiple Choice

1. 66
2. 104
3. 94
4. 82

Answer 1

Answer:

Option (3) is correct.

Explanation:

Given that,

Unit completed and transferred out = 74 units

Ending work in process = 20 units

Here, we are using a weighted-average process cost system,

Equivalent units:

= Unit completed and transferred out + (Ending work in process × Percent completion)

= 74 units + (20 units × 100%)

= 74 units + 20 units

= 94 units

Therefore, the Fabrication Department's equivalent units of production related to materials for July is 94 units.