Brambles Corporation has two sequential processing departments: Assembly then Shaping. The Shaping Department reports the following information. Conversion costs are applied evenly throughout the process. What is the total number of equivalent units for direct materials?

Question

Brambles Corporation has two sequential processing departments: Assembly then Shaping. The Shaping Department reports the following information. Conversion costs are applied evenly throughout the process.  What is the total number of equivalent units for direct materials?

Quizplus · Accepted Answer

The total number of equivalent units for direct materials in the Shaping Department is calculated as follows:
Beginning WIP inventory: 10,000 units x 100% = 10,000 equivalent units
Units started and completed: 30,000 units x 100% = 30,000 equivalent units
Ending WIP inventory: 7,200 units x 60% = 4,320 equivalent units
Total equivalent units for direct materials: 10,000 + 30,000 + 4,320 = 44,320
Since the Shaping Department is the second sequential processing department, the equivalent units for direct materials need to be added to the equivalent units for direct materials in the Assembly Department to get the total equivalent units for direct materials. The equivalent units for direct materials in the Assembly Department are given as 12,600. Therefore, the total equivalent units for direct materials are 44,320 + 12,600 = 57,920, which is closest to option D (57,200).

Brambles Corporation Has Two Sequential Processing Departments: Assembly Then Shaping