B-20.02 Equivalent unit calculations Zeus Corporation produces cultured diamonds

Question

B-20.02 Equivalent unit calculations Zeus Corporation produces cultured diamonds via a secretive process that grows the diamonds in a vac- uum chamber filled with a carbon gas cloud. The diamonds are produced in a single continuous process, and Zeus uses the weighted-average process costing method of accounting for production. The production process requires constant utilization of facilities and equipment, as well as direct labor by skilled technicians. As a result, direct labor and factory overhead are both deemed to be introduced uniformly throughout production. At the beginning of June, 20X9,4,000 diamonds were in process.During June, an additional 8,000 diamonds were started, and 7,000 diamonds were completed and transferred to finished goods.

Explanation / Answer

Zeus Corporation Unit Reconciliation Schedule For the Month Ended June 30 Unit information Units to account for during production: Inventory in process, June 1 4000 Units started into production 8000 Total units 12000 Whole Units Equivalent Units of Production Materials Direct labor Factory overhead Completed and transferred to Finished goods 7000 7000 7000 7000 Inventory in process, June 30 5000 3500 2000 2000 Total units 12000 10500 9000 9000

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