Asked by Katie Moules on Jul 21, 2024
Verified
The equivalent units of production for labour and overhead for the month are
A) 70,000 units.
B) 90,000 units.
C) 82,500 units.
D) 80,000 units.
Weighted-Average Method
A method of inventory costing that assigns a weighted average cost to each item in inventory, used in both perpetual and periodic inventory systems.
Process Costing System
A costing methodology used in manufacturing where costs are assigned to batches of products rather than individual items, suitable for homogeneous products.
Equivalent Units
The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.
- Be able to calculate equivalent units of production for materials and conversion costs using the weighted-average method.
Verified Answer
MH
Madison HendrixJul 27, 2024
Final Answer :
C
Explanation :
To calculate the equivalent units of production for labor and overhead using the weighted-average method, we consider both the work completed during the month and the work in process at the end of the month. The calculation is as follows:- Completed during the month: 80,000 units (these are 100% complete for labor and overhead).- Work in process at the end of the month: The remaining 10,000 units (90,000 started - 80,000 completed = 10,000 not completed) are 25% complete for labor and overhead. Therefore, equivalent units for these are 10,000 units * 25% = 2,500 units.Adding these together: 80,000 units (completed) + 2,500 units (WIP at 25%) = 82,500 equivalent units for labor and overhead.
Learning Objectives
- Be able to calculate equivalent units of production for materials and conversion costs using the weighted-average method.