A company uses a process costing system.Its Welding Department completed and transferred out 100,000 units during the current period.The ending inventory in the Welding Department consists of 30,000 units (75% complete with respect to direct materials and 40% complete with respect to conversion costs). Determine the equivalent units of production for the Welding Department for direct materials and conversion costs assuming the weighted average method.
A)130,000 materials; 130,000 conversion.
B)130,000 materials; 112,000 conversion.
C)107,500 materials; 118,000 conversion.
D)122,500 materials; 112,000 conversion.
E)112,500 materials; 130,000 conversion.

Question

Quizplus · Accepted Answer

To calculate the equivalent units of production for direct materials and conversion costs, we need to consider the units that are completed and transferred out during the period, as well as the ending inventory that is partially completed.

For direct materials:
Equivalent units of production = Units completed and transferred out + (Ending inventory * Percentage complete)
Equivalent units of production = 100,000 + (30,000 * 75%)
Equivalent units of production = 122,500 units

For conversion costs:
Equivalent units of production = Units completed and transferred out + (Ending inventory * Percentage complete)
Equivalent units of production = 100,000 + (30,000 * 40%)
Equivalent units of production = 112,000 units

Therefore, the answer is D, 122,500 materials and 112,000 conversion.

A Company Uses a Process Costing System