Question

A production department in a process manufacturing system completed its work on 74,000 units of product and transferred them to the next department during a recent period. Of these units, 29,600 were in process at the beginning of the period. The other 44,400 units were started and completed during the period. At period-end, 17,200 units were in process.

Equivalent Units of Production (EUP)—Weighted Average Method 1. All direct materials are added to products when processing begins. Units % Materials EUP—Materials Goods completed 74,000 100% 74,000 Ending work in process 17,200 100% 17,200 Total 91,200 91,200 2. Beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 70% complete as to materials and conversion costs. Units % Materials EUP—Materials Goods completed 74,000 100% 74,000 Ending work in process Total 3. Beginning inventory is 60% complete as to materials and 30% complete as to conversion costs. Ending inventory is 20% complete as to materials and 70% complete as to conversion costs. Units % Materials EUP—Materials Goods completed 74,000 100% 74,000 Ending work in process Total

Answer 1

The calculation of equivalent units depends on the cost flow assumption used, In the weighted average method, total equivalent units for the process for a period are calculated using the following formula.

Total equivalent units for a cost component = A + B × C

Where
A = units transferred out to the next department/finished goods
B = units in closing work in process
C = percentage of completion with respect to the relevant cost component

Calculate total equivalents units using the following information.

Units in opening work in process	29600
Units added	44000
Units transferred out	74000
Units in closing work in process	17200
% of completion of closing WIP–direct materials	100%
% of completion of closing WIP–conversion costs	100%

Solution

Total equivalent units–direct materials = 74000 + 17200 × 100% = 91200

Total equivalent units–conversion costs = 74000 + 17200 × 100% = 91200

2. The beginning inventory is 40% complete as to materials and conversion costs. Ending inventory is 70% complete as to materials and conversion costs.

                                                            Units                     % Materials                         EUP-Materials

Goods completed                              74000                   100                                      74000

Ending work in process                    17200                   70                                         12040

Total                                                    91200                                                                86040

Units in opening work in process(40% of 74000)	29600
Units added	44000
Units transferred out	74000
Units in closing work in process	17200
% of completion of closing WIP–direct materials	70%
% of completion of closing WIP–conversion costs	70%

Total equivalent units–direct materials = 74000 + 17200 × 70% = 63840

Total equivalent units–conversion costs = 74000 + 17200 × 70% = 63840

3. Beginning inventory is 60% complete as to materials and 30% complete as to conversion costs. Ending inventory is 20% complete as to materials and 70% complete as to conversion costs.

                                                            Units                     % Materials                         EUP-Materials

Goods Completed                             74000                   100                                      74000

Ending work in process                    17200                   20                                         3440

Total                                                    91200                                                                77440

Units in opening work in process (60% of 74000)	44400
Units added	44000
Units transferred out	74000
Units in closing work in process	17200
% of completion of closing WIP–direct materials	20%
% of completion of closing WIP–conversion costs	70%

Total equivalent units–direct materials = 74000 + 17200 × 20% = 18240

Total equivalent units–conversion costs = 74000 + 17200 × 70% = 63840