Answer the following question(s)using the information below:
Hawk Ltd.uses process costing in its Fabricating Department.At the beginning of October, it had 12,000 units in beginning work-in-process that were 40% complete with respect to conversion.During October it put 87,000 units into production and completed 89,000 good units.At October 31, there were 3,000 units in ending work-in-process that were 70% complete with respect to conversion.Direct materials are added at the beginning of the process.Inspection occurs at the end of the process and normal spoilage is 6% of good output.Costs related to the beginning inventory were $36,800 for direct materials and $28,600 for conversion costs.During the month, the company issued $280,000 of direct materials and incurred $599,400 of conversion costs.
-Assuming Hawk uses the weighted-average method for process costing, the equivalent units for direct materials and conversion for October are
A)89,000 units; 88,100 units.
B)87,000 units; 93,300 units.
C)82.000 units; 91.100 units.
D)99,000 units; 98,100 units.
E)92,000 units; 90,200 units.

Question

Quizplus · Accepted Answer

Under the weighted-average method, equivalent units for direct materials are the units completed (89,000) plus the ending work-in-process (3,000), totaling 92,000 units. For conversion costs, equivalent units are the units completed (89,000) plus 70% of the ending work-in-process (3,000 * 0.7 = 2,100), totaling 91,100 units. However, considering normal spoilage (6% of 89,000 = 5,340), the equivalent units for conversion are adjusted to 98,100.

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