West Company has a product that goes through three processes and requires materi

Question

West Company has a product that goes through three processes and requires materials in the first and the second processes. In the first process, direct materials are added at the beginning of the process. In the second process, direct materials are added at the end of the process. Conversion costs are added evenly during the process. The following data pertain to the second process for March 2018 Physical Units Transferred-in Costs Direct Materials Conversion Costs Beginning W-in-P, 1/3 % of Completion, Beginning W-in-P Transferred in during March Completed and transferred out 210,000 during march W-in-P, ending inventory % of completion, ending w-in-P 50,000 100% 0% 80% 200,000 100% 0% 40% Required 1. Assume the Company uses the weighted average method of costing. Compute equivalent units for the second process (3 marks) 2. Assume the Company uses the First-in, First-out method, Compute equivalent units for the second process (3 marks)

Explanation / Answer

Solution 1:

Solution 2:

Computation of Equivalent unit of Production - Second Process (Weighted Average) Particulars Physical Units Prior Department Cost Material Conversion Unit completed & Transferred out 210000 210000 210000 210000 Closing WIP: 40000 Prior deparment cost (100%) 40000 Material (0%) 0 Conversion (40%) 16000 Equivalent units of production 250000 250000 210000 226000

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