Calculating Equivalent Units
Street Smarts, Inc., mass-produces street lights. Materials used in constructing the body of the lights are added at the start of the process, while the materials used in wiring the lights are added at the halfway point. All labor and overhead are added evenly throughout the manufacturing process.
Street Smarts uses process costing and had the following unit production information available for the months of March and April:
| March | April |
Number of lights in beginning work in process | 1,000 | 2,000 |
Lights transferred to finished goods | 5,000 | 7,000 |
Number of lights in ending work in process | 2,000 | 1,500 |
In March, the lights in beginning work in process were approximately 90 percent complete, while those in ending work in process were only 40 percent complete. In April, the units remaining in ending work in process were 75 percent complete. All lights in ending work in process are finished during the next month.
Instructions
a. For the month of March, calculate the equivalent units of production for the three major cost categories—body materials, wiring materials, and labor and overhead.
b. For the month of April, calculate the equivalent units of production for the three major cost categories—body materials, wiring materials, and labor and overhead.
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