Question

A company uses a process costing system. It's welding department completed and transferred out 100,000 units during the current period. The ending inventory in the welding department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs).

Determine the equivalent units of production for the welding department for direct materials and conversion costs assuming the weighted average method.

A. 130,000; 130,000
B. 130,000; 112,000
C. 107,500; 118,000
D. 122,500; 112,000
E. 112,500; 130,000

Answer 1

Option D is correct

Equivalent units

Material cost = 122, 500

Conversion cost = 112,000

Step-by-step explanation:

Equivalent units = Units × degree of completion(%)

Material cost

Item Unit Equivalent units

transferred out 100,000 100,000× 100% = 100,000

Closing inventory 30,000 30,000 75% = 22,500

Equivalent unit 122,500

Conversion cost

Item Unit Equivalent units

transferred out 100,000 100,000× 100% = 100,000

Closing inventory 30,000 30,000 × 40% = 12,000

Equivalent unit 112,000

Equivalent units

Material cost = 122, 500

Conversion cost = 112,000