Onlon Chemicals manufactures paint thinner. Information on the work in process follows: Beginning inventory, 30,000 partially complete gallons. Transferred out, 157,500 gallons. Ending inventory (materials are 10 percent complete; conversion costs are 20 percent complete). Started this month, 180,000 gallons. Required: a. Compute the equivalent units for materials using the weighted-average method. b. Compute the equivalent units for conversion costs using the weighted-average method.

The equivalent units for conversion costs using the weighted-average method are 168,000

The equivalent units for materials using the weighted-average method are 162,750

Explanation:

onlon Chemicals

Equivalent units can be calculated by the following

Particulars            Units      % of Completion           Equivalent Units

                                                   Mat.  Con. Costs     Materials C. Costs

Transferred out, 157,500           100       100             157,500  157,500

Ending inventory, 52,500          10            20              5250      10,500

Total Equivalent Units                                                162,750   168,000

Working

Ending Inventory= Opening + Started - Transferred Out

Ending Inventory=30,000 +180,000 -157,500 = 52,500 gallons

The equivalent units are calculated by two ways either by adding ending inventory and transferred out units or by adding beginning inventory with units started.

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