Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 15

Compute Equivalent Units: Weighted-Average Method

Clean Corporation manufactures liquid window cleaner. The following information concerns its work in process:

• Beginning inventory, 8,000 partially complete gallons.

• Transferred out, 42,000 gallons.

• Ending inventory (materials are 10 percent complete; conversion costs are 20 percent complete).

• Started this month, 48,000 gallons.

Required

a.Compute the equivalent units for materials using the weighted-average method.

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b.Compute the equivalent units for conversion costs using the weighted-average method.

Step 1 of 3

All units cannot be wholly completed at the end of a specific period. Some units may be partially complete. Expenses (Material cost and conversion costs) might have been incurred on such units to the extent of their completion. Hence, in order to determine the actual production in a process, the concept of equivalent units is used. The partially completed units are multiplied with their percentage of completion and the resultant figure is considered as whole units produced.

Calculation for C Corporation:

Table showing calculation of physical units

Particulars	Number of units
Balance at the start of the period (a)	8,000
Add: Units input (b)	48,000
Less: Units transferred out (c)	42,000
Balance at the end of period (d)= (a) + (b) – (c)	14,000