Required: a. Adams Company's production cycle starts in Department A. The following information is available for July: Units Work in process, July 1 (60% complete) 71,000 Started in July 360,000 Work in process, July 31 (20% complete) 39,000 Materials are added at the beginning of the process in Department A. Using the weighted-average method, what are the equivalent units of production for materials and conversion costs for the month of July, respectively

materials = 431,000 units and

conversion = 399,800 units

Explanation:

Note that Adams Company uses weighted-average method. This means we calculate equivalent units of production on the number of physical units completed and transferred and units in ending inventory.

Step 1 : Determine units completed and transferred

Units completed and transferred = Opening Inventory + Units Started - Ending Inventory

                                                       = 71,000 + 360,000 - 39,000

                                                       = 392,000

Step 2 : Determine equivalent units of production

Materials

Units completed and transferred (392,000 x 100%) = 392,000

Units in ending inventory (39,000 x 100%)                = 39,000

Total equivalent units of production                          = 431,000

Conversion

Units completed and transferred (392,000 x 100%) = 392,000

Units in ending inventory (39,000 x 20%)                =       7,800

Total equivalent units of production                          = 399,800