1) Using the average cost method, compute the equivalent units of production in each of the following cases: A) Units started in production during the month, 72,000; units completed and transferred, 52,800; and units in process at the end of the month (100% complete as to materials; 60% complete as to conversion), 19,200. (There was no beginning inventory.
B) Units in process at the beginning of the month (100% complete as to materials; 30% complete as to conversion), 12,000; units started during the month, 48,000; and units in process at the end of the month (100% complete as to materials; 40% complete as to conversion), 24,000.
2) In Department D, materials are added uniformly throughout processing. The beginning inventory was considered 80% complete, as was the ending inventory. Assume that there were 6,000 units in the beginning inventory and 20,000 in the ending inventory, and that 80,000 units were completed and transferred out of Department D. What are the equivalent units for the period using the average cost method?
3) If in question 2 the total costs charged to the department amounted to $960,000, including the $48,000 cost of the beginning inventory, what is the cost of the units completed and transferred out?

1.  the equivalent units of production

A. Materials = 72,000 units Conversion = 64,320 units

B. Materials = 60,000 units Conversion = 45,600 units

2. Materials = 45,600 units

3. $ 1,684,000

Explanation:

1.  the equivalent units of production

The Concept of Equivalent Units of Production Measures the number of units completed to the extend of inputs introduced in the process

A.

Materials

units completed and transferred (52,800×100%) = 52,800

units in Ending Work In Process (19,200 × 100%) = 19,200

Total equivalent units of production                     =  72,000

Conversion

units completed and transferred (52,800×100%) = 52,800

units in Ending Work In Process (19,200 × 60%)  =   11,520

Total equivalent units of production                     =  64,320

B.

First Determine the number of units completed and transferred.

units completed and transferred = 12,000 + 48,000 - 24,000

                                                       = 36,000

Materials

units completed and transferred (36,000×100%)  = 36,000

units in Ending Work In Process (24,000 × 100%) = 24,000

Total equivalent units of production                      =  60,000

Conversion

units completed and transferred (36,000×100%)  = 36,000

units in Ending Work In Process (24,000 × 40%)  =    9,600

Total equivalent units of production                      =  45,600

2.  the equivalent units of production

Materials

units completed and transferred (80,000×100%)  = 80,000

units in Ending Work In Process (20,000 × 80%)  =  16,000

Total equivalent units of production                      =  45,600

3. the cost of the units completed

First Calculate the cost per equivalent of production

cost per equivalent = Total Cost / Total Equivalent units

                                = $960,000 / 45,600

                                = $21.05

Then , calculate the cost of the units completed and transferred out

cost of the units completed and transferred = $21.05 × 80,000

                                                                         = $ 1,684,000

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