The Binding Department is the second stage of News Printing's production cycle.On May 1,the beginning work in process contained 30,000 units that were 60 percent complete.During May,170,000 units were transferred in from the first stage of Pine's production cycle and 160,000 units were completed and transferred to Finished Goods.On May 31,the ending work in process contained 40,000 units that were 25 percent complete.Using the average cost method,the equivalent units of the Assembly Department are:
A)170,000 54,000 50,000
B)200,000 160,000 160,000
C)200,000 170,000 170,000
D)240,000 200,000 200,000

Question

The Binding Department is the second stage of News Printing's production cycle.On May 1,the beginning work in process contained 30,000 units that were 60 percent complete.During May,170,000 units were transferred in from the first stage of Pine's production cycle and 160,000 units were completed and transferred to Finished Goods.On May 31,the ending work in process contained 40,000 units that were 25 percent complete.Using the average cost method,the equivalent units of the Assembly Department are: 
A)170,000 54,000 50,000 
B)200,000 160,000 160,000 
C)200,000 170,000 170,000 
D)240,000 200,000 200,000

Quizplus · Accepted Answer

The equivalent units for the Binding Department are calculated as follows:

Units transferred in from first stage: 170,000 
Beginning work in process: 30,000 x 60% = 18,000 
Units started in current period: 170,000 - 18,000 = 152,000 
Total units to account for: 170,000 + 18,000 + 152,000 = 340,000

Units completed and transferred out: 160,000 
Ending work in process: 40,000 x 25% = 10,000 
Equivalent units = Units completed and transferred out + (Ending work in process x % complete) 
= 160,000 + (10,000 x 25%) 
= 162,500

Therefore, the equivalent units for the Binding Department are 170,000 (transferred in) + 162,500 (completed and transferred out and ending work in process) = 332,500.

The answer choice that includes 170,000 and 170,000 as equivalent units for transferred in and completed and transferred out is incorrect, as it does not take into account the ending work in process.

The answer choice that includes 240,000 and 200,000 as equivalent units for transferred in and completed and transferred out is also incorrect, as it overstates the equivalent units based on the fact that the ending work in process is not considered in the transferred in units.

Therefore, the best choice is C, which correctly calculates the equivalent units using the average cost method.

The Binding Department Is the Second Stage of News Printing's