Question

Builder Products, Inc., uses the weighted-average method in its process costing system. It manufactures a caulking compound that goes through three processing stages prior to completion. Information on work in the first department, Cooking, is given below for May:

Production data:
Pounds in process, May 1; materials 100% complete; conversion 90% complete		76,000
Pounds started into production during May		410,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		36,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	117,900
Conversion cost	$	53,600
Cost added during May:
Materials cost	$	613,080
Conversion cost	$	294,700

Required:

1. Compute the equivalent units of production for materials and conversion for May.

2. Compute the cost per equivalent unit for materials and conversion for May.

3. Compute the cost of ending work in process inventory for materials, conversion, and in total for May.

4. Compute the cost of units transferred out to the next department for materials, conversion, and in total for May.

5. Prepare a cost reconciliation report for May.

Answer 1

Solution

	Pulping	Conversion
Equivalent Units of Production	471,600	464,400

.

	Pulping	Conversion
Cost per equivalent Unit	$ 1.55	$ 0.75

.

	Pulping	Conversion	Total
Ending Inventory	$ 33,480	$ 10,800	$ 44,280

.

	Pulping	Conversion	Total
Units Completed and transferred	$ 697,500	$ 337,500	$ 1,035,000

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 171,500
Cost incurred during period	$ 907,780
Total cost to be accounted for	$ 1,079,280
Costs accounted for as follows:
Cost of Units Transferred Out	$ 1,035,000
Cost of Ending Wip	$ 44,280
Total cost accounted for	$ 1,079,280

Working

Reconciliation of Units
A	Beginning WIP	76,000
B	Introduced	410,000
C=A+B	TOTAL	486,000
D	Transferred out	450,000
E=C-D	Ending WIP	36,000

.

Statement of Equivalent Units(Weighted average)
				Pulping		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	450,000			100%	450,000	100%	450,000
Ending WIP	36,000			60%	21,600	40%	14,400
Total	486,000			Total	471,600	Total	464,400

.

Cost per Equivalent Units (Weighted average)
COST		Pulping	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 117,900	$ 53,600	$ 171,500
Cost incurred during period (B)		$ 613,080	$ 294,700	$ 907,780
Total Cost to be accounted for (C=A+B)		$ 730,980	$ 348,300	$ 1,079,280
Total Equivalent Units(D)		471,600	464,400
Cost per Equivalent Units (E=C/D)		$                   1.55	$                     0.75	$                        2.30

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$ 1.55	21,600	$          33,480.00	450,000	$        697,500.00
Conversion	$ 0.75	14,400	$          10,800.00	450,000	$        337,500.00
TOTAL	$ 1,079,280	TOTAL	$ 44,280	TOTAL	$ 1,035,000