LO.2 (WA EUP)
O’Malley Corp. uses a weighted-average process costing system.
Material is added at the beginning of the production process and
overhead is applied on the basis of direct labor. O’Malley’s records
indicate that 70,000 units were in process at the beginning of May 2010;
these units were 35 percent complete as to conversion. In May, the
company started 445,300 and completed 427,500 units. May’s ending
inventory was 30 percent complete as to conversion.
a. What are the equivalent units of production for direct material?
b. What are the equivalent units of production for conversion?
SOLUTION:
Beginning WIP
Inventory (35%)
70,000
Beginning WIP
Inventory
Started
445,300
Started and
completed
(427,500 - 70,000)
To account for
515,300
Ending WIP
Inventory
Accounted for
70,000
357,500
87,800
515,300
Units
DIrect Material
Conversion
70,000
70,000
70,000
Started &
completed
357,500
357,500
357,500
Ending WIP
Inventory
87,800
87,800
(87,800 * 0.3)
30,730
515,300
515,300
458,23
Beginning WIP
Inventory
EUP