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Chapter 16: Q8QS (page 745)

The following refers to units processed by an ice cream maker in July. Compute the total equivalent units of production with respect to conversion for July using the weighted-average method.
Gallons of product
Percent of conversion added
Beginning work-in-process
320,000
25%
Goods started
620,000
100
Goods completed
680,000
100
Ending work-in-process
260,000
75

Short Answer

Expert verified

Equivalent units of production for conversion:875,000 units.

Step by step solution

01

Finished Goods

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

02

Equivalent units’ definition

The metric used to express the work-in-process in terms of completed units is equivalent. This metric is used by the business entity applying process costing.

03

Calculation of equivalent units

Particular	Units
Goods completed	680,000
Equivalent units in ending work-in-process $(260, 000 \times 75 %)$	195,000
Equivalent units of production	875,000

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Most popular questions from this chapter

What are the two main inventory methods used in process costing? What are the differences between these methods?

Refer to the information in QS 16-10. Prepare the November 30 journal entry to record the transfer of units (and costs) from the assembly department to the painting department. Use the weighted-average method.

Many companies acquire software to help them monitor and control their costs and as an aid to their accounting systems. One company that supplies such software is proDacapo (prodacapo.com). There are many other such vendors. Access proDacapo’s website, click on “Products,” then click on “Prodacapo Process Management,” and review the information displayed.

Required

How is process management software helpful to businesses? Explain with reference to costs, efficiency, and examples, if possible.

BOGO Inc. has two sequential processing departments, roasting and mixing. At the beginning of the month, the roasting department has 2,000 units in inventory, 70% complete as to materials. During the month, the roasting department started 18,000 units. At the end of the month, the roasting department had 3,000 units in ending inventory, 80% complete as to materials.

Cost information for the roasting department for the month is as follows:

Beginning work in process inventory (direct materials)	2,170
Direct materials added during the month	27,900

Question: During May, 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, 37,500 were in process in the production department at the beginning of May and 150,000 were started and completed in May. May’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of May, 51,250 additional units were in process in the production department and were 60% complete with respect to materials and 20% complete with respect to conversion. The production department had \(505,035 of direct materials and \)396,568 of conversion cost charged to it during May. Its beginning inventory included \(74,075 of direct materials cost and \)28,493 of conversion cost.

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 May using the FIFO method.
3.Compute the direct materials cost and the conversion cost per equivalent unit for the department.
4.Using the FIFO method, assign May’s costs to the units transferred to finished goods and assign costs to its ending work in process inventory.

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