Question

Alton Company uses a process-costing system for its single product. Material A is added at the beginning of the process; in contrast, material B is added when the units are 75% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 80% complete. Which of the following correctly expresses the equivalent units of production with respect to materials A and B in the ending work-in-process inventory?
a. A, 4,800; B, 0.
b. A, 4,800; B, 4,800.
c. A, 6,000; B, 0.
d. A, 6,000; B, 4,800.
e. A, 6,000; B, 6,000.

Answer 1

Answer:

e. A, 6,000; B, 6,000.

Explanation:

At the beginning of the process Materials A are added. Therefore it won't matter if the process is 80% or less/more is complete, the materials A have already been added and would be equivalent to the ending work-in-process inventory i.e. 6,000 units.

Materials B are added when the units are 75% complete. Since the ending work-in-process are 80% complete, then this means that the Materials B equivalent to 6,000 units have already been added to the ending inventory.

Hence, both materials A and B have been added to the ending work-in-process inventory for 6,000 units. Therefore, option E is correct.