[McKizz]

The following information concerns Forming’s equivalent units in May 20X1:

Units
Beginning work-in-process (50% complete) 2,000
Units started during May 8,000
Units completed & transferred 7,000
Ending work-in-process (80% complete) 2,500

Using the weighted average method, what were Forming’s May 20X1 equivalent units?
a. 7,000
b. 9,000
c. 10,000
d. 19,500

Choice “b” is correct.
Units completed 7,000
Ending WIP (2,500 x .80) 2,000
9,000
Choices “a”, “c”, and “d” are incorrect based on the above explanation.

I’m confused as to why you can’t do for this problem:
BEG WIP 2,000 x 100% = 2000 (take full amount for weighted average)
Units Started & Completed (Completed – Beg (7000 – 2000) or Started – End (8000 – 2500)) = 5000 vs. 4500
Ending WIP 2500 x 80% = 2000

Answer is 9000, which you get if you use the completed minus beg, but not the started – end. I’ve used this formula for all of the other questions, and I’m confused as to why it didn’t work out this time. Any help would be greatly appreciated, good luck to everyone out there taking an exam! #PassDatIsh

[McKizz]

Ohhh, is it because that 7,000 is essentially the “units completed during the month”? Its not the total of just overall units completed?

Essentially, what is the difference between completed vs. completed and transferred…

(Spent way too long trying to figure this out lol. Thanks in advance for any help)

[madaconte]

There isn't a different between “completed” and “completed and transferred.” The difference is instead between “completed and transferred” and “started and completed.” “Completed and transferred” is all units that were finished without taking into account that some units were actually already in progress at the beginning of the period. On the other hand, “Started and completed” deducts the number of units that were already in progress at the beginning of the period. The question might give you one or the other, but it's actually really simple to manipulate to what you need.

# of Units completed & transferred – Beginning WIP (# of units in total, no need for percentages) = # of Units started and completed

You can also express this as: # of Units completed & transferred = # of Units started and completed + Beginning WIP (# of units in total, no need for percentages)

For weighted average: it's all units completed and transferred during the month, regardless of what was in beginning WIP. Then add the 80%-complete units in ending WIP.

For FIFO: instead of using all units completed and transferred, you just use what was started and completed. Then add the 80%-complete units in ending WIP, and the 50% remaining to be completed of the beginning WIP.

In this problem, it's easy. Just take the 7,000 and add it to the 2,000 beginning WIP. No need to take 50% of it because it's already accounted for because “Units completed and transferred” already includes it and this is a “weighted average”

Now, if this problem asked for FIFO equivalent units, you'd need to figure out what was started and completed during the period.
It would be: 7,000 – 2,000 = 5,000. Add 50% remaining to complete of beginning WIP: 1,000. And 80% complete of ending WIP: 2,000. 8,000 in total.

[Author]

Replies