Question

A department had 12,500 units which were 20% complete in beginning Goods in Process Inventory. During the current period 60,000 units were transferred in. Ending Goods in Process Inventory was 15,000 units which were 70% complete. Assume this company uses the Weighted Average method of process costing and direct material is added uniformly throughout the process. What are the equivalent units produced with respect to direct material?

a. 65,500.
b. 57,500.
c. 37,000.
d. 47,500.
e. 68,000.

Answer 1

To calculate the equivalent units produced for direct materials using the Weighted Average method, we add the equivalent units from the beginning inventory, the units transferred in, and the ending inventory, which results in a total of 73,000 equivalent units.

Step-by-step explanation:

To determine the equivalent units produced with respect to direct material using the Weighted Average method of process costing, we need to consider both the units transferred in and the completion percentage of the goods in the beginning and ending inventory.

The beginning Goods in Process Inventory had 12,500 units, which were 20% complete. Thus, the equivalent units for these would be 12,500 units * 0.20 = 2,500 units.

For the units transferred in during the period, since direct materials are added uniformly throughout the process, all 60,000 units are 100% complete with regards to direct material. So, the equivalent units for these are 60,000 units * 1 = 60,000 units.

The ending Goods in Process Inventory has 15,000 units 70% complete. The equivalent units for these would be 15,000 units * 0.70 = 10,500 units.

Add all these equivalent units together to get the total equivalent units of production for direct materials: 2,500 + 60,000 + 10,500 = 73,000 units.