Clonex Labs, Inc., uses the weighted-average method in its process costing system. The following data are available for one department for October: Percent Completed Units Materials Conversion Work in process, October 1 46,000 90 % 55 % Work in process, October 31 31,000 68 % 52 % The department started 390,000 units into production during the month and transferred 405,000 completed units to the next department. Required: Compute the equivalent units of production for October.

Question

Janet Hartman

Business

18 October, 13:10

Clonex Labs, Inc., uses the weighted-average method in its process costing system. The following data are available for one department for October: Percent Completed Units Materials Conversion Work in process, October 1 46,000 90 % 55 % Work in process, October 31 31,000 68 % 52 % The department started 390,000 units into production during the month and transferred 405,000 completed units to the next department. Required: Compute the equivalent units of production for October.

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Jimena Higgins · Answer 1

Equivalent units:

Equivalent units refer to quantity of incomplete units manufactured by the company that is expressed in terms of quantity of completed units. It is a term used to describe the work in progress units of production of the company which is also known as incomplete units of production.

Weighted average process costing method:

The weighted average method is method used in the process costing to calculate the cost per unit of equivalent units produced and assigns such cost to the equivalent units completed and transferred out of the process and to the equivalents units of ending work-in process inventory.

Under weighted average method, total of all costs including the beginning, work started units and ending inventory is divided by the total equal units of work done to date.

Compute Equivalent units of production for October assuming that the company uses the weighted-average method of accounting for units and costs as follows:

The calculation can be done using the following formula:

Equivalent units of production (Material) = (Units completed during October x100%) + (Ending WIP x' % of completion)

Equivalent units of production (Conversion) = (Units completed during October x 100%) + (Ending WIP x % of completion)

The Computation of Equivalent Units is as follows:

Given,

The department transferred 405,000 units to the next department.

Equivalent units of production (Materials) = (405,000 + 68% x 31,000)

Equivalent units of production (Materials) = 405,000 + 21,080

Equivalent units of production (Materials) = 426,080 units

Equivalent units of production (Conversion) = (405,000 + 52% x 31,000)

Equivalent units of production (Conversion) = 405,000 + 16,120

Equivalent units of production (Conversion) = 421,120 units