Question

During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion.

1. Compute the number of units transferred to finished goods.

2. Compute the number of equivalent units with respect to both materials used and conversion used in the production department for April using the weighted-average method.

Short answer

1. Units transferred to finished goods:300,000 units.
2. Equivalent units

Material:365,600

Conversion:324,600

Step-by-step solution

Definition of Finished Goods

Finished goods can be defined as all those goods held by the business entity that has passed all the processes of the product and is now ready for sale. These goods are reported as a resource of the business.

Number of units transferred to finished goods

Particular	Units
Beginning inventory	60,000
Add: Started during the period	322,000
Less: Ending inventory	(82,000)
Units transferred to finished goods	300,000

Note: 82,000 units are added because this represents the additional units introduced.

Calculation of equivalent units using the weighted average method

For material:

Particular	Units
Units transferred out	300,000
Ending inventory	65,600
Equivalent units	365,600

For conversion:

Particular	Units
Units transferred out	300,000
Ending inventory	24,600
Equivalent units	324,600