 In this presentation, we will take a look at equivalent units of production using a weighted average method. We're going to calculate this within Excel. This is going to be our data down below. We have the given data in terms of units and then we got the percent completed for materials and percent completed for the conversion. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Remember that the conversion consists of those things to change the material to the finished goods. That includes the direct labor and the factory overhead. We've got the work in process for June 1st. We're talking about a particular department here. So we're calculating for a particular department processing this department. Units started into production in June for this time period, June, the month of June. Units completed and transferred out of Department A during June. So we're going to say this is the amount of units that we took out and then we've got work in process for June 30th. So notice what we're talking here are in terms of units. So we have units that we're talking about and we need to determine the units that are involved so that we can use those as well to apply out the dollar amounts that will be involved. When we look at the financial accounting, of course, we're going to be talking about dollars. We're going to use units and equivalent units to help us to apply out the dollar amount to the portion that is still in our department, the stuff that's still in ending work in process, and the stuff that has been completed and has been transferred out of our department. And we're going to do that with the use of units. To consider the units then, we have the total units that we need to account for, but some of these units are partially completed. So then we got to think, okay, well, if they're partially completed, there's two ways that we can consider the partially completed numbers. One, materials. Are they partially completed in terms of the material involved? And two, the conversion. Are they partially completed in terms of conversion? Now, you might think, hey, there's three things involved in inventory. Materials, direct labor, and the overhead. But note, we only have two things we're considering here, and that's because we're combining together the conversion, which is the direct labor and the overhead. So we're combining those things together so that we only have two things we have to consider. So we have the utilities, units, and then the percentage completed with regard to materials of the same 330 total units, and then the percent completed with regard to the conversion of these same 330 units. So that's going to be the data that we have here. 40% complete for the working process in June 1st, 20% complete for the complete conversion costs, the direct labor, and the overhead. So we have 330 total units. The amount that's going to be completed for materials and conversion is always going to be something equal or less than that. It can't ever be more than that, the 330 total units that we're accounting for. And then we're going to do the same for the ending process here. So the units that are started into production are the 6,600, units completed and transferred out of the department, 5,940, working process what's still in there at the end of the time period, the end of the month, 990, 60% complete with regard to materials, and 30% complete with regard to the conversion. So then we're going to go down and compute the equivalent units of production. So the equivalent units of production. We're going to start with the units completed and transferred out of the department in June. And notice how easy this process is going to be. We're just going to say that that is equal to this 5,940. And we're just going to say that that is it. It's going to be it for both the materials and the same for the conversion. Notice what we're not doing. We're not trying to break out the portion that was in the beginning work in process. And that's going to be the weighted average method, because we're kind of averaging out the beginning and ending work in process. And in doing so, it's basically less calculation. So when we consider the first and first out method, it'll be a bit more complex, although it might make a little bit more sense, because we're assuming a first and first out flow method. In this case, we're just basically kind of netting out or averaging out the beginning and ending work in process. And therefore the calculation is going to be a little bit more simplified. The units completed and transferred out of the department in June. We're just going to say is the 5,940. And then we're going to take with that the work in process for June 30th, the end of the month. So we got June 30th, the end of the month. That was this 990. This one we're going to take into consideration the 60 and the 30% completed. How did we come up with these numbers? Most book problems will of course give them to you in practice. We would have to determine how much in Indian inventory, how much is there, how many units are there in Indian inventory, and how much is complete with regard to the materials and conversion given our best estimate and the industry that we're in. We're going to take this as the given on the book problem, that it's 60 and 30 materials and conversion. So what we're going to do is we're just going to take that 990 times 0.6. Oh, that's not right. That's going to take the 990 times 0.6. And that's going to give us the 594. So we're going to have the 594 here. And then we're going to take that 990 times the 0.3. The 0.3. And that's going to give us the 297. Let's do that in Excel. We're going to say this equals the 990 times the 0.6 tab. That's the 594. This equals the 990 times the 30. And that gives us the 297. Now we're just going to add these two up. That'll give us the 6534 here. And it's going to give us on this side the 6237. We're going to use the sum function to do so. I'm just going to say equals SUM and sum these up. I'll do the same here. Equals SUM. We're just adding those up, of course. And that'll give us equivalent units of production in the department during June. And then the next thing we'll calculate is the cost per equivalent unit so that we can assign out the costs to the units. And that's going to be the costs here. So eventually we want to be able to apply out the costs to the amount that are still left in ending working process and the amount that have been transferred out. And now of course we've got the units involved that are still in ending working process with regard to materials and conversion and the amount that has been completed and transferred out. And so now we're going to take those amounts and use them to apply out the cost and we'll need to, in order to do that, get a cost per equivalent unit calculation.