Question

A production department's output for the most recent month consisted of 15,000 units completed and transferred to the next stage of production and 15,000 units in ending Work in Process inventory. The units in ending Work in Process inventory were 80% complete with respect to both direct materials and conversion costs. There were 2,000 units in beginning Work in Process inventory, and they were 90% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.

Answer 1

Answer: 27,000 units

Explanation:

Equivalent Units of Production are used when units produced are not yet completed but costs still need to be assigned to them. They will therefore be treated as completed units according to the percentage of completion that they are at.

Equivalent Units of Production = Units transferred out + % complete Ending Work in Process units

= 15,000 + ( 80% * 15,000)

= 27,000 units