In its initial year of operation, Montoya Manufacturing started and completed 4,000 identical widgets and had 1,000 widgets that were 40% complete in work-in-process at the end of the year. Total production costs for the year were $55,000. What was the equivalent units of production during the year?
A) 4,600 equivalent units
B) 5,000 equivalent units
C) 4,000 equivalent units
D) 4,400 equivalent units

Question

Quizplus · Accepted Answer

Equivalent units are the number of complete units that could have been produced given the total amount of direct materials, direct labor, and manufacturing overhead costs incurred during a period.

For Montoya Manufacturing:
- 4,000 widgets were completed during the year.
- The 1,000 widgets that were 40% complete represent 400 equivalent units (1,000 x 40%).
- The total equivalent units are 4,000 + 400 = 4,400 equivalent units.

Therefore, the answer is D.

In Its Initial Year of Operation, Montoya Manufacturing Started and Completed