Muses Manufacturing produces plastic toys and uses process costing. There are three processing departments-Assembling, Finishing, and Packaging. On January 1, 2012, the Finishing Department had 2,000 units of partially processed product in production. During January, 32,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, there were 5,000 units of partially processed products remaining in the Finishing Department. See additional details below. Finishing Department, ending balance at January 31, 2012 For the Finishing Department, what was the number of equivalent units for the month of January, with respect to direct materials?
A)33,500 units
B)34,000 units
C)29,000 units
D)4,500 units

Question

Muses Manufacturing produces plastic toys and uses process costing. There are three processing departments-Assembling, Finishing, and Packaging. On January 1, 2012, the Finishing Department had 2,000 units of partially processed product in production. During January, 32,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, there were 5,000 units of partially processed products remaining in the Finishing Department. See additional details below. Finishing Department, ending balance at January 31, 2012  For the Finishing Department, what was the number of equivalent units for the month of January, with respect to direct materials?
A)33,500 units 
B)34,000 units 
C)29,000 units 
D)4,500 units

Quizplus · Accepted Answer

Equivalent units for direct materials = Units completed + (Ending WIP inventory x % of completion)
Units completed = 29,000
Ending WIP inventory = 5,000 units
% of completion = (Equivalent units of DM in ending WIP inventory) / (Units started into production) = (2,500 units) / (32,000 units) = 7.81%
Equivalent units for direct materials = 29,000 + (5,000 x 7.81%) = 33,500 units

Muses Manufacturing Produces Plastic Toys and Uses Process Costing