Question

Equivalent Units of Production: Average Cost Method

Units of production data for the two departments of Atlantic Cable and Wire Company for July of the current fiscal year are as follows:

	Drawing Department	Winding Department
Work in process, July 1	2,100 units, 65% completed	650 units, 30% completed
Completed and transferred to next processing department during July	33,600 units	32,750 units
Work in process, July 31	1,600 units, 70% completed	1,100 units, 20% completed

Each department uses the average cost method.

a. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for the Drawing Department.

Whole units	units
Equivalent units of production	units

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

Whole units	units
Equivalent units of production	units

Answer 1

whole units	=	units transferred out	+	ending WIP
drawing department	=	33600	+	1600	=	35200
winding department	=	32750	+	1100	=	33850

equivalent units of production	=	units transferred out +	+	ending WIP* percent completion
drawing dept	=	33600	+	1600*70%	=	33600+1120	34720
winding dept	=	32750	+	1100*20%	=	32750+220	32970

a. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for the Drawing Department.

Whole units	35200units
Equivalent units of production	34720units

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

Whole units	33850units
Equivalent units of production	32970units

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