Question

Agee Company uses a process-costing system... Agee 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 50% complete. The firm's ending work-in-process inventory consists of 6,000 units that are 75% 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:

Agee Company

The equivalent units of production with respect to materials A and B in the ending work-in-process inventory are:

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

Explanation:

a) Data and Calculations:

Material A is added at the beginning of the process and is 100% complete

Material B is added at the stage when Material A is 50% complete and is 100% complete at this stage.

If the firm's ending work-in-process inventory = 6,000 units that 75% complete, it implies that 100% materials of A were added and 100% materials of B were added.

Therefore, the equivalent units of materials A and materials B are 6,000 units each.