Metaline Corp.uses the weighted average method for inventory costs and had the following information available for the year.Equivalent units of production for the year are:
A)3,200 units.
B)3,320 units.
C)3,240 units.
D)3,520 units.
E)3,800 units.

Question

Metaline Corp.uses the weighted average method for inventory costs and had the following information available for the year.Equivalent units of production for the year are: 
A)3,200 units. 
B)3,320 units. 
C)3,240 units. 
D)3,520 units. 
E)3,800 units.

Quizplus · Accepted Answer

The equivalent units of production for the year are calculated by adding together the equivalent units for completed units and the equivalent units for ending work in process (WIP). The equivalent units for completed units are the actual number of units completed during the year. The equivalent units for ending WIP are calculated as the percentage of completion of the ending WIP multiplied by the number of units in the ending WIP. 
In this problem, we are not given the actual number of units completed during the year, but we can calculate it by adding together the units started and completed during the year. We are given that there were 4,000 units started during the year, but we are not given how many of those units were completed. However, we are given that there were 1,600 units in ending WIP with a percentage of completion of 50%. This means that 800 units of ending WIP were completed during the year (50% of 1,600). Therefore, the total equivalent units of production for the year are: 
Equivalent units for completed units = 800
Equivalent units for ending WIP = 1,600 x 50% = 800
Total equivalent units of production = 800 + 800 = 1,600
However, we also need to calculate the equivalent units of production for the materials and conversion costs separately. This is because the cost per equivalent unit for materials may be different than the cost per equivalent unit for conversion costs. 
For materials:
Equivalent units for completed units = 800
Equivalent units for ending WIP = 1,600 x 50% = 800
Total equivalent units of production for materials = 800 + 800 = 1,600
For conversion costs:
Equivalent units for completed units = 800
Equivalent units for ending WIP = 1,600 x 50% = 800
Equivalent units for abnormal spoilage = 120
Total equivalent units of production for conversion costs = 800 + 800 + 120 = 1,720
Therefore, the total equivalent units of production for the year are 1,600 for materials and 1,720 for conversion costs, for a total of 3,320 units. The correct answer is B.