Question

Smith Manufacturing uses a process cost system to manufacture laptop computers. The following information summarizes operations relating to laptop computer model #KJK20 during the quarter ending March 31: Units Direct Labor Work-in-process inventory, January 1 100 $50,000 Started during the quarter 500 Completed during the quarter 400 Work-in-process inventory, March 31 200 Costs added during the quarter $720,000 Beginning work-in-process inventory was 50% complete for direct labor costs. Ending work-in-process inventory was 75% complete for direct labor costs. Required What is the equivalent unit of production using the weighted-average unit cost inventory valuation method?

Answer 1

Equivalent units shall be:

Material = 600 units

Direct Labor = 540 units

Step-by-step explanation:

As for the provided information, we have:

Provided opening units added = 100 units of $50,000

Which is 50% complete for labor and 100% complete for material.

Added during the period = 500 units for $720,000

Out of which total units completed during the period = 400 units.

Thus, closing work in process = 500 + 100 - 400 = 200 units

Which is 100% complete for materials and 75% for direct labors.

Therefore, equivalent units of production shall be:

For materials = 400 units + 200 = 600 units

For direct labor = 400
`*` 100% + 200
`*` 75% = 540 units.