Equivalent Units of Production: Average Cost Method The following information concerns production in the Finishing Department...

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Equivalent Units of Production: Average Cost Method The following information concerns production in the Finishing Department...

Equivalent Units of Production: Average Cost Method

The following information concerns production in the Finishing Department for May. The Finishing Department uses the average cost method.

ACCOUNT Work in Process—Finishing Department				ACCOUNT NO.
Date		Item	Debit	Credit	Balance
					Debit	Credit
May	1	Bal., 20,100 units, 80% completed			80,400
	31	Direct materials, 98,500 units	240,340		320,740
	31	Direct labor	149,000		469,740
	31	Factory overhead	151,400		621,140
	31	Goods transferred, 104,500 units		597,740	23,400
	31	Bal., ? units, 35% completed			23,400

a. Determine the number of units in work in process inventory at the end of the month.
units

b. Determine the number of whole units to be accounted for and to be assigned costs and the equivalent units of production for May.

Whole units	units
Equivalent units of production	units

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a. Assume that the items in beginning inventory were the first items completed during the period. How many then were started and completed during the period? How many units were started during the period but are still in process at the end of the period?

b. How many units were started during the current period? How many units were complete at the end of the period? How many units were still in work in process? How much in resources had these units in ending work in process consumed during the current period?

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Answer 1

Answer #1

Solution a:

Number of units in work in process inventory at the end of the month = Units in beginning WIP + Units started - Units completed and transferred out

= 20100 + 98500 - 104500 = 14100 units

Solution b:

Finishing Department
Computation of Equivalent unit of Production
Particulars	Whole Units	Equivalent units
Units to account for:
Beginning WIP	20100
Started into Production	98500
Total units to account for	118600
Units accounted for:
Unit completed & Transferred out	104500	104500
Units in ending inventory (35%)	14100	4935

Equivalent units of production	118600	109435

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Answer 2

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