P5.32 LO 5.2 Weighted average process costing: manufacturer Schweitzer Limited's machining department had 20000 units in work in process on 1 March. These units were 40 per cent complete with respect to conversion. Direct materials are added at the beginning of the production process, while conversion costs are incurred uniformly throughout the process. An additional 40000 units were started during March, and 10000 units were in work in process on 31 March. The units in work in process on 31 March were 20 per cent complete with respect to conversion. Costs incurred in the machining department for March were as follows: Direct material Conversion Work in process 1 March Costs incurred during March Total $156000 $504.000 $660000 46 400 $202400 265 600 $769600 312000 $972000 Required 1. Using an example, explain the concept of equivalent units. Explain why an understanding of equivalent units is necessary to undertake process costing. 2. Using the weighted average method of process costing, calculate the cost of goods completed and transferred out during March and the cost of work in process at 31 March. Show all workings. 3. Construct an Excel spreadsheet to prepare March's production report. What is the total cost of completed units if the units in work in process on 31 March are 70 per cent complete with respect to conversion?