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)120,000 materials; 120,000 conversion.
B)120,000 materials; 160,000 conversion.
C)128,000 materials; 120,000 conversion.
D)128,000 materials; 144,000 conversion.
E)128,000 materials; 184,000 conversion.

Question

Quizplus · Accepted Answer

- For direct materials, we take the equivalent units of production for the completed and transferred out units (120,000) and for the ending inventory (40,000 at 20% complete), which gives us 120,000 + (40,000 x 20%) = 128,000 equivalent units of production for direct materials.
- For conversion costs, we also take the equivalent units of production for the completed and transferred out units (120,000) and for the ending inventory (40,000 at 60% complete), which gives us 120,000 + (40,000 x 60%) = 144,000 equivalent units of production for conversion costs. 
Therefore, the total equivalent units of production for the Weaving Department are 128,000 for direct materials and 144,000 for conversion costs, which is represented by choice D.

A Company Uses a Process Costing System