Question

Victory Company uses weighted-average process costing to account for its production costs. Conversion cost is added evenly throughout the process. Direct materials are added at the beginning of the first process. Additional information for the first process follows. During November, the first process transferred 700,000 units of product to the second process. At the end of November, work in process inventory consists of 180,000 units that are 30% complete with respect to conversion. Beginning work in process inventory had $420,000 of direct materials and $139,000 of conversion cost. The direct material cost added in November is $2,220,000, and the conversion cost added is $3,254,000. Beginning work in process consisted of 60,000 units that were 100% complete with respect to direct materials and 80% complete with respect to conversion. Of the units completed, 60,000 were from beginning work in process and 640,000 units were started and completed during the period. Required: For the first process: 1. Determine the equivalent units of production with respect to direct materials and conversion.

Answer 1

• Direct materials = 880,000 units
• Conversion = 754,000 units

Step-by-step explanation:

a. Direct materials

Direct materials are added at the beginning of the process which means that the ending WIP is already 100% complete with respect to direct materials.

EUP Direct materials = Finished goods + Closing EUP

= 700,000 + 180,000

= 880,000 units

b. Conversion

= Finished goods + Closing EUP

= 700,000 + (0.30 * 180,000)

= 700,000 + 54,000

= 754,000 units