Question

Zahn Industries uses process costing system. During October, the finishing department had 30,000 units in beginning work-in-process inventory and 45,000 units in ending work in process inventory. During the month, 95,000 units were transferred in from the previous department. Materials are added at the end of the process and conversion costs are added uniformly throughout the process. Beginning work-in-process was 20% complete with respect to conversion costs; ending inventory was 40% complete with respect to conversion costs. If Zahn uses weighted-average costing, the equivalent units of production for materials and conversion costs are:

Answer 1

Answer:

The equivalent units of production for materials and conversion costs are 98,000 units each

Explanation:

For computing the equivalent units of production for materials and conversion costs first, we have to compute the units started and completed units which is shown below:

= Beginning work-in-process inventory units + transferred units -  ending work-in-process inventory units

= 30,000 units + 95,000 units - 45,000 units

= 80,000 units

Now the equivalent units of production would be

For material costs:

= (Units started and  completed units × completed percentage) + (ending inventory units × completed percentage)

=  (80,000 units × 100%)  + (45,000 units × 40%)

= 80,000 units + 18,000 units

= 98,000 units

For conversion costs:

= (Units started and  completed units × completed percentage) + (ending inventory units × completed percentage)

=  (80,000 units × 100%)  + (45,000 units × 40%)

= 80,000 units + 18,000 units

= 98,000 units