Question

Selected production and cost data of Laura’s Caliper Co. follow for May 2018:

	Mixing Department	Heating department
Units to account for :
Beginning WIP, April 30	25,000	10,000
Started in May	90,000
Transferred in during May		90,000
Total units to account for	115,000	100,000
Units accounted for:
Completed and transferred out during may	90,000	82,000
Ending WIP, May 31	25,000	18,000
Total units accounted for	115,000	100,000

On May 31, the Mixing Department ending Work-in-Process Inventory was 80%

complete for materials and 45% complete for conversion costs. The Heating Department ending Work-in-Process Inventory was 60% complete for materials and 35% complete for conversion costs. The company uses the weighted-average method. Requirements

1. Compute the equivalent units of production for direct materials and for conversion costs for the Mixing Department.

2. Compute the equivalent units of production for transferred in costs, direct materials, and conversion costs for the Heating Department.

Short answer

1. The equivalent unit of production for direct material for the mixing department is 110,000 units, and the conversion cost is 101,250.

2. The equivalent unit of production for direct materials for the heating department is 92,800 units, and the conversion cost is 88,300 units.

Step-by-step solution

Step-by-Step Solution:Step 1: Equivalent Unit of Production

The equivalent unit of production is calculated by multiplying the number of units with the completion percentage. The Equivalent unit of production for direct material is the aggregate of the equivalent unit completed unit and the equivalent units of WIP units.

Equivalent unit of production for direct materials for the mixing department

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{direct}\mathbf{}\mathbf{material}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{90}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{25}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{80}\mathbf{\%}) \\ \mathbf{=}\mathbf{110}\mathbf{,}\mathbf{000} \end{gathered}$$

Equivalent unit of production for conversion costs for the mixing department

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{Conversion}\mathbf{}\mathbf{costs}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{90}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{25}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{45}\mathbf{\%}) \\ \mathbf{=}\mathbf{101}\mathbf{,}\mathbf{250} \end{gathered}$$

Equivalent unit of production for direct materials for the heating department

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{direct}\mathbf{}\mathbf{material}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{82}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{18}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{60}\mathbf{\%}) \\ \mathbf{=}\mathbf{92}\mathbf{,}\mathbf{800} \end{gathered}$$

Equivalent unit of production for conversion costs for the heating department

$$\begin{gathered} \mathbf{EUP}\mathbf{}\mathbf{for}\mathbf{}\mathbf{Conversion}\mathbf{}\mathbf{costs}\mathbf{=}(\mathbf{Completed}\mathbf{}\mathbf{units}\mathbf{\times }\mathbf{Completion}\mathbf{\%})\mathbf{+}(\mathbf{Ending}\mathbf{}\mathbf{WIPunits}\mathbf{\times }\mathbf{Completion}\mathbf{\%}) \\ \mathbf{=}(\mathbf{82}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{100}\mathbf{\%})\mathbf{+}(\mathbf{18}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{35}\mathbf{\%}) \\ \mathbf{=}\mathbf{88}\mathbf{,}\mathbf{300} \end{gathered}$$