Question

Highlands Company uses the weighted-average method in its process costing system. It processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below:  

		Percent Completed
	Tons of Pulp	Materials		Labor and Overhead
Work in process, June 1	80,000	81	%	29	%
Work in process, June 30	51,100	41	%	16	%
Started into production during June	300,800

Required:  

1. Compute the number of tons of pulp completed and transferred out during June.

2. Compute the equivalent units of production for materials and for labor and overhead for June.

Answer 1

Statement of equivalent units for the month of June

Input (tons)	Particulars	Output (tons)	Materials		Labour and overheads
			%	Equivalent Units(tons)	%	Equivalent units(tons)
380800 (300800+80000)	Completed and transferred out	329700 (380800-51100)	100	329700	100	329700
	Closing WIP	51100	41	20951	16	8176
380800	Total	380800		350651		337876

Notes:

1. Since this is the weighted average method, the order of transfer of units does not matter.
2. The equivalent units are found by using the total percentage of work done on the units rather than just for the month. For this reason and that the method is weighted average, the percentage for opening WIP along with the other completed units is taken as 100%.
3. Equivalent units= output units* respective percentage of completion

Question 1:

Number of tons of pulp competed and transferred out during June= 329700 tons (refer output column of the table)

Question 2:

Equivalent units of:

1. Materials= 350651 tons
2. Labour and overhead= 337876 tons