Questions: Exercise 4-6 (Static) Equivalent Units of Production-Weighted-Average Method [LO4-2] Highlands Company uses the weighted-average method of process costing. It processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below: - Percent Completed - Tons of Pulp - Materials - Labor and Overhead - Work in process, June 1: 20,000 tons of pulp, Materials 90%, Labor and Overhead 80% - Work in process, June 30: 30,000 tons of pulp, Materials 60%, Labor and Overhead 40% - Started into production during June: 190,000 tons of pulp Required: 1. Compute the number of tons of pulp completed and transferred out during June. 2. Compute the equivalent units of production for materials and for labor and overhead for June.

Exercise 4-6 (Static) Equivalent Units of Production-Weighted-Average Method [LO4-2] Highlands Company uses the weighted-average method of process costing. It processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below: - Percent Completed - Tons of Pulp - Materials - Labor and Overhead - Work in process, June 1: 20,000 tons of pulp, Materials 90%, Labor and Overhead 80% - Work in process, June 30: 30,000 tons of pulp, Materials 60%, Labor and Overhead 40% - Started into production during June: 190,000 tons of pulp Required: 1. Compute the number of tons of pulp completed and transferred out during June. 2. Compute the equivalent units of production for materials and for labor and overhead for June.
Transcript text: Exercise 4-6 (Static) Equivalent Units of Production-Weighted-Average Method [LO4-2] Highlands Company uses the weighted-average method of process costing. It processes wood pulp for various manufacturers of paper products. Data relating to tons of pulp processed during June are provided below: \begin{tabular}{|c|c|c|c|} \hline \multirow[t]{2}{*}{} & \multicolumn{3}{|r|}{Percent Completed} \\ \hline & Tons of Pulp & Materials & Labor and Overhead \\ \hline Work in process, June 1 & 20,000 & 90\% & 80\% \\ \hline Work in process, June 30 & 30,000 & 60\% & 40\% \\ \hline Started into production during June & 190,000 & & \\ \hline \end{tabular} Required: 1. Compute the number of tons of pulp completed and transferred out during June. 2. Compute the equivalent units of production for materials and for labor and overhead for June.
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Solution

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To solve this problem, we need to use the weighted-average method of process costing to determine the number of tons of pulp completed and transferred out during June, as well as the equivalent units of production for materials and for labor and overhead.

Required 1: Compute the number of tons of pulp completed and transferred out during June.

  1. Calculate the total tons of pulp to account for:

    • Work in process, June 1: 20,000 tons
    • Started into production during June: 190,000 tons
    • Total tons to account for = 20,000 + 190,000 = 210,000 tons

  2. Calculate the tons of pulp completed and transferred out:

    • Total tons to account for: 210,000 tons
    • Work in process, June 30: 30,000 tons
    • Tons completed and transferred out = Total tons to account for - Work in process, June 30
    • Tons completed and transferred out = 210,000 - 30,000 = 180,000 tons
Required 2: Compute the equivalent units of production for materials and for labor and overhead for June.

  1. Equivalent units for materials:

    • Completed and transferred out: 180,000 tons (100% complete for materials)
    • Work in process, June 30: 30,000 tons at 60% complete for materials
    • Equivalent units for materials = 180,000 + (30,000 * 60%)
    • Equivalent units for materials = 180,000 + 18,000 = 198,000 equivalent units

  2. Equivalent units for labor and overhead:

    • Completed and transferred out: 180,000 tons (100% complete for labor and overhead)
    • Work in process, June 30: 30,000 tons at 40% complete for labor and overhead
    • Equivalent units for labor and overhead = 180,000 + (30,000 * 40%)
    • Equivalent units for labor and overhead = 180,000 + 12,000 = 192,000 equivalent units
Summary:
  • Tons completed and transferred out during June: 180,000 tons
  • Equivalent units of production for materials: 198,000 units
  • Equivalent units of production for labor and overhead: 192,000 units
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