Question

Washington State Fisheries, Inc., processes salmon for various distributors. Two departments, processing and packaging, are involved. Data relating to tons of salmon sent to the processing department during May follow:

			Percent Completed
	Tons of Salmon		Direct Materials			Conversion
Work-in-process inventory, May 1	2,360		80	%		70	%
Work-in-Process inventory, May 31	2,880		50	%		30	%
Started processing during May	7,500

Required:

1. Calculate the number of tons completed and transferred out during the month.

2. Calculate the number of equivalent units for both direct materials and conversion for the month of May, assuming that the company uses the weighted-average method.

3. How would your answer in requirement 2 change if the percentage of completion in ending inventory were as follows: direct materials 30%, conversion 40%?

Answer 1

Solution

Requirement 1

Units completed and transferred out= 6,980

Requirement 2

	Material	Conversion
Equivalent Units of Production	8,420	7,844

.Requirement 3

Equivalent units will change to

	Material	Conversion
Equivalent Units of Production	7,844	8,132

The change will be as follows

	Material	Conversion
Equivalent Units of Production	7,844	8,132
Equivalent Units of Production	8420	7844
Difference	576	(288)

Working

Reconciliation of Units
A	Beginning WIP	2,360
B	Introduced	7,500
C=A+B	TOTAL	9,860
D	Transferred out	6,980
E=C-D	Ending WIP	2,880

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	6,980			100%	6,980	100%	6,980
Ending WIP	2,880			50%	1,440	30%	864
Total	9,860			Total	8,420	Total	7,844

Working for requirement 3

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	6,980			100%	6,980	100%	6,980
Ending WIP	2,880			30%	864	40%	1,152
Total	9,860			Total	7,844	Total	8,132