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

Question

Alison

Business

19 January, 03:29

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

+4

Answers (1)

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Hadassah Garrett · Answer 1

Option D is correct

Equivalent units

Material cost = 122, 500

Conversion cost = 112,000

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