# Equivalent Units of Production and Cost per Equivalent Unit

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Problem 3
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Units Materials Conversion

Work in process July 1 6,000 75% 40%
Work in process July 31 4,000 50% 25%

Materials cost in work in process July 1 \$56,000
Conversion costs in work in process July 1 \$14,900
Units started in production 28,000
Units transferred to the next department 30,000
Materials cost added during July \$38,500
Conversion costs added during July \$21,450

A. Assume the company uses the weighted average method of accounting for units and costs.
Determine the equivalent units produced during July.

B. Compute the cost per equivalent unit of material and of conversion.

The equivalent units of production for a department are the number of units transferred to the
next department plus the equivalent units in the department's ending work in process
inventory.
Cost of beginning
work in process Cost added during
Cost per equivalent unit = inventory + the period
Equivalent units of production

My computations:
Materials Conversion
A. units completed and xfer'd out 30,000 30,000
work in process, July 31:
4,000 units x 50% 2,000
4,000 units x 25% 1,000
Equivalent units of production in work in process 32,000 31,000
for July

B. Total Cost Materials Conversion
Cost to be accounted for:
Work in process, July 1 \$70,900 \$56,000 \$14,900
Costs added in July \$59,950 \$38,500 \$21,450
Total Cost \$130,850 \$94,500 \$36,350

Equivalent units 32,000 31,000
Cost per equivalent unit \$2.95 \$1.17

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Formatted MS Excel file containing information and examples that illustrate how to figure equivalent units of production and cost per equivalent unit.

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Dwayne Felder, MA

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AA, City University of New York
BA, University of Phoenix
MA, University of Phoenix

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