Question

Equivalent Units of Production: Average Cost Method

The following information concerns production in the Finishing Department for May. The Finishing Department uses the average cost method.

ACCOUNT Work in Process—Finishing Department					ACCOUNT NO.
Date		Item	Debit		Credit		Balance
							Debit		Credit
May	1	Bal., 25,100 units, 75% completed					150,600
	31	Direct materials, 123,000 units	450,180				600,780
	31	Direct labor	279,100				879,880
	31	Factory overhead	283,600				1,163,480
	31	Goods transferred, 130,500 units			1,119,690		43,790
	31	Bal., ? units, 30% completed					43,790

a. Determine the number of units in work in process inventory at the end of the month.
units

b. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for May.

Whole units	units
Equivalent units of production	units

Answer 1

Requirement a

Units in ending Inventory = 17,600

Requirement b

Whole units	148,100 units
Equivalent units of production	135,780 units

Working

Reconciliation of Units
A	Beginning WIP	25,100
B	Introduced	123,000
C=A+B	Units to account for	148,100
D	Transferred out	130,500
E=C-D	Ending WIP	17,600

.

	Units	Complete %	Equivalent units
Transferred out	130,500	100%	130,500
Ending WIP	17,600	30%	5,280
Total	148,100	Total	135,780