Forthefunofit Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department A had a beginning inventory of 2,000 units, 50% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 40% complete for conversion costs. Using weighted average process costing, the equivalent units for direct material for the month were:
A) 13,600
B) 16,000
C) 15,000
D) 15,600

Question

Quizplus · Accepted Answer

Since direct materials are added at the beginning of the process, the equivalent units for direct materials would be the total units started plus the beginning inventory, which equals 14,000 units started + 2,000 units from beginning inventory = 16,000 units. The completion percentage for conversion costs and the ending inventory completion percentage do not affect the calculation for direct materials when they are added at the beginning of the process.

Forthefunofit Ltd Uses a Process Costing System