Question

Compute Equivalent Units: Ethical Issues Hoyt, Inc. has a process costing system at its Forest Street Plant. All materials are introduced when conversion costs reach 40 percent. The following information is available for physical units during August:

Units started in August 163,000
Units transferred out to Finishing Department in August 178,000
Work in process, August 1 (85% complete as to conversion costs) 41,000
Work in process, August 31 (25% complete as to conversion costs) 26,000

Compute the equivalent units for materials costs and for conversion costs using the weighted-average method.

Answer 1

The equivalent units for materials costs and conversion costs using the weighted-average method are 184,500 units.

Step-by-step explanation:

To compute the equivalent units for materials costs and conversion costs using the weighted-average method, we need to consider the work-in-process units at the beginning of the period, units started during the period, and units completed during the period.

For materials costs, the equivalent units are the sum of units completed and the work in process units at the end of the period, adjusted for the percentage of completion.

In this case, the equivalent units for materials costs would be 178,000 (completed units) + (26,000 x 0.25) (work-in-process units at the end of the period x percentage of completion) = 178,000 + 6,500 = 184,500 units.

For conversion costs, the equivalent units are calculated similarly, but using the percentage of completion for conversion costs. In this case, the equivalent units for conversion costs would be 178,000 (completed units) + (26,000 x 0.25) (work-in-process units at the end of the period x percentage of completion) = 178,000 + 6,500 = 184,500 units.