Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 25% complete at the end of the month. During the month, it completed and transferred 600 units. All direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the number of equivalent units that should be used for assigning costs to work completed with regard to direct materials

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Business

Gracie Bishop

26 November, 18:53

Assembly department of Zahra Technologies had 200 units as work in process at the beginning of the month. These units were 45% complete. It has 300 units which are 25% complete at the end of the month. During the month, it completed and transferred 600 units. All direct materials are added at the beginning of production. Conversion costs are allocated evenly throughout production. Zahra uses weighted-average process-costing method. What is the number of equivalent units that should be used for assigning costs to work completed with regard to direct materials

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Goldie · Answer 1

Total equivalent units of material = 900

Explanation:

Equivalent units are notional whole units which represent incomplete works are used to allocate cost to work in progress and completed units

Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.

Equivalent unit = Degree of completion * units

Item units Equivalent units

Completed units 600 100% * 600 = 600

Closing inventory 300 100% * 300 = 300

Total equivalent units of material 900

Note simply because materials are added at the beginning of the process, it is assumed that all the quantity required would have been added. Hence the degree of completion for materials is 100%.