Gentle Giant Company uses the weighted-average method in its process costing sys
ID: 2812454 • Letter: G
Question
Gentle Giant Company uses the weighted-average method in its process costing system. The following information was available about one of the company’s processing departments:
There were 108,000 equivalent units of production with respect to conversion costs during the current month.
There were 15,000 units in the department's beginning work in process inventory, which were two-thirds complete with respect to conversion costs.
During the current month, 105,000 units were started and 100,000 were completed and transferred out of the department.
The ending work in process inventory in the department:
Explanation / Answer
Total units = Units in beginning work in process + units started this period
= 15,000 + 105,000 = 120,000 units
Again,
Total units = Units completed and transferred + units in ending work in process
120,000 units = 100,000 units + units in ending work in process
Units in ending work in process = 120,000 – 100,000 = 20,000 units
Under weighted average method,
Equivalent units = Units transferred to finished goods + equivalent units in ending WIP inventory
108,000 units = 100,000 units + equivalent units in ending WIP inventory
Equivalent units in ending WIP inventory = 108,000 - 100,000 = 8,000 units
20,000 unfinished units x % completion = 8,000 equivalent units
% completion = 8,000/20,000 = 0.4 or 40 %
There are 20,000 units in ending work in process inventory which are 40 % completed with respect to conversion cost.
Hence option 4th “Was 40 % complete with respect to conversion cost” is correct answer.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.