The information below was obtained from the records of the first processing department of Christine Corporation for the month of July. The company uses the weighted-average method in its process costing system.
$\begin{array} { |l | r | r | }
\hline & \text { Number of Units } & \begin{array} { r }
\text { Labour and overhead } \
\text { percentage complete }
\end{array} \
\hline \begin{array} { lrr }
\text { Work in process inventory, } \
\text { July 1 }
\end{array} & 20,000 & 40 \% \
\hline \text { Started during the month } & 70,000 & \
\hline \begin{array} { l }
\text { Completed during the } \
\text { month }
\end{array} & 80,000 & \
\hline \begin{array} { l }
\text { Work in process inventory, } \
\text { July 31 }
\end{array} & ? & 25 \% \
\hline
\end{array}$All materials are added at the beginning of the manufacturing process.

-What are the equivalent units of production for labour and overhead for the month?
A) 70,000 units.
B) 90,000 units.
C) 80,000 units.
D) 82,500 units.

Question

The information below was obtained from the records of the first processing department of Christine Corporation for the month of July. The company uses the weighted-average method in its process costing system.
$\begin{array} { |l | r | r | } 
\hline & \text { Number of Units } & \begin{array} { r } 
\text { Labour and overhead } \
\text { percentage complete }
\end{array} \
\hline \begin{array} { lrr  } 
\text { Work in process inventory, } \
\text { July 1 }
\end{array} & 20,000 & 40 \% \
\hline \text { Started during the month } & 70,000 & \
\hline \begin{array} { l } 
\text { Completed during the } \
\text { month }
\end{array} & 80,000 & \
\hline \begin{array} { l } 
\text { Work in process inventory, } \
\text { July 31 }
\end{array} & ? & 25 \% \
\hline
\end{array}$All materials are added at the beginning of the manufacturing process.

-What are the equivalent units of production for labour and overhead for the month?
A) 70,000 units.
B) 90,000 units.
C) 80,000 units.
D) 82,500 units.

Quizplus · Accepted Answer

The formula for equivalent units of production is:

Equivalent Units = actual units completed and transferred out + (equivalent units in ending work in process inventory – equivalent units in beginning work in process inventory)

For labor, the calculation is:
150,000 units completed and transferred out + (17,500 – 10,000) = 157,500 equivalent units

For overhead, the calculation is:
150,000 units completed and transferred out + (20,000 – 12,500) = 157,500 equivalent units

Therefore, the equivalent units of production for labor and overhead for the month is 157,500 units. The closest answer choice is D) 82,500 units, which is incorrect. The correct answer is D) 157,500 units.

The Information Below Was Obtained from the Records of the First