A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,000 units in beginning Work in Process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 75% complete. Compute the number of equivalent units produced by the department.
A) 165,000.
B) 181,500.
C) 187,000.
D) 145,000.
E) 173,500.

Question

Quizplus · Accepted Answer

To calculate equivalent units, we need to consider both units completed and partially completed in ending work in process inventory.

Equivalent units of production = units completed and transferred out + (units in ending WIP inventory × percentage of completion)

Units completed and transferred out = 165,000

For ending work in process inventory, we need to determine the number of units that are fully complete (at 100% completion) and those that are partially complete (less than 100% complete).

Fully complete units = 22,000 × 75% = 16,500
Partially complete units = 22,000 × 25% = 5,500

Total equivalent units of production = 165,000 + 16,500 + 5,500 = 181,500

Therefore, the answer is (B) 181,500.

A Company Uses the Weighted Average Method for Inventory Costing