ECONOMICS

Detailed explanation-1: -Under the weighted-average method, the equivalent units used to compute the unit costs of ending inventories relate only to work done during the current period. In calculating cost per equivalent unit under the weighted-average method, prior period costs are not combined with current period costs.

Detailed explanation-2: -Equivalent units = Number of physical units × Percentage of completion. For direct materials, 3, 000 equivalent units = 5, 000 physical units × 60 percent complete; for direct labor and overhead, 1, 500 equivalent units = 5, 000 physical units × 30 percent complete.

Detailed explanation-3: -To calculate cost per equivalent unit by taking the total costs (both beginning work in process and costs added this period) and divide by the total equivalent units.

Detailed explanation-4: -In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers: Current costs plus cost of beginning work-in-process inventory.

Detailed explanation-5: -When the weighted-average method of process costing is used, a department’s equivalent units are computed by: adding the units transferred out to the equivalent units in ending inventory. The Assembly Department started the month with 35, 000 units in its beginning work in process inventory.