A company uses a process costing system. Its Weaving Department completed and transferred out 120,000 units during the current period. The ending inventory in the Weaving Department consists of 40,000 units (20% complete with respect to direct materials and 60% complete with respect to conversion costs). Determine the equivalent units of production for the Weaving Department for direct materials and conversion costs assuming the weighted average method.
A) 128,000 materials; 120,000 conversion.
B) 120,000 materials; 160,000 conversion.
C) 128,000 materials; 144,000 conversion.
D) 128,000 materials; 184,000 conversion.
E) 120,000 materials; 120,000 conversion.

Question

Quizplus · Accepted Answer

To calculate the equivalent units of production for direct materials, we need to add the units transferred out and the ending inventory, multiplied by the percentage completed with respect to direct materials.
Direct materials equivalent units = (120,000 + 40,000) x 100% = 160,000 x 80% = 128,000 units
To calculate the equivalent units of production for conversion costs, we use the same formula but with the percentage completed with respect to conversion costs:
Conversion costs equivalent units = (120,000 + 40,000) x 100% = 160,000 x 90% = 144,000 units
Therefore, the best choice is C, which shows 128,000 equivalent units of direct materials and 144,000 equivalent units of conversion costs.

A Company Uses a Process Costing System