HTC Calculators uses process costing.At the beginning June, there were 1,100 units in
Process, 70% complete with respect to material and 60% complete with respect to conversion costs.During June, 24,000 units were started and 23,600 units were completed.The units in ending Work in Process inventory were 90% complete with respect to material and 30% complete with respect to conversion costs.How many equivalent units will be used in calculating the cost per unit for materials during June?
A)24,950 units
B)24,050 units
C)25,720 units
D)22,950 units

Question

Quizplus · Accepted Answer

Equivalent units for materials = Units completed + (Ending WIP units * % completion for materials) = 23,600 + (500 * 90%) = 23,600 + 450 = 24,050 units. However, this calculation does not account for the beginning inventory's state of completion for materials, which was 70% complete for 1,100 units, meaning those units were already counted in a previous period for their material component. Therefore, the correct calculation should only consider the units completed and the portion of the ending WIP inventory that was worked on during the current period, leading to the answer provided being incorrect based on the explanation. The correct calculation should involve adjusting for the beginning inventory and correctly applying the percentage completion for materials to the units processed during the current period.

HTC Calculators Uses Process Costing