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        75,000
Pounds started into production during May        400,000
Pounds completed and transferred out        ?
Pounds in process, May 31; materials 75% complete;
conversion 25% complete        35,000
Cost data:          
Work in process inventory, May 1:          
Materials cost    $    102,300
Conversion cost    $    45,600
Cost added during May:          
Materials cost    $    531,800
Conversion cost    $    250,575

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

Answer 1

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

STATEMENT OF EQUIVALENT PRODUCTION(WEIGHTED AVERAGE COST METHOD)
	UNITS	MATERIAL		CONVERSION COST
		%COMPLETION	EQUIVALENT UNITS	%COMPLETION	EQUIVALENT UNITS
FINISHED AND TRANSFERRED	440000	100	440000	100	440000
CLOSING WORK IN PROGRESS	35000	75	26250	25	8750
TOTAL PRODUCTION	475000		466250		448750

Answer 2

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

STATEMENT OF COST
COST	MATERIAL	CONVERSION COST	TOTAL
COST OF OPENING WIP	$                     102,300	$             45,600	$             147,900
COST IN AND DURING THE PROCESS	$                     531,800	$           250,575	$             782,375
TOTAL COST	634100	296175	$             930,275
EQUIVALENT UNITS	466250	448750
COST PER UNIT=TOTAL COST/UNITS	$                            1.36	$                  0.66	$                    2.02

Answer 3

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

CALCULATION OF COST of 35000 Pounds ENDING WORK IN PROCESS IN MAY
COMPONENT	EQUIVALENT UNITS	Rate	Amount
MATERIAL	26250	$                  1.36	$               35,700
LABOR	8750	$                  0.66	$                  5,775
TOTAL VALUE OF WORK IN PROCESS	of 35000 Pounds		$               41,475

Answer 4

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

CALCULATION OF COST of UNITS TRANSFERRED OUT
	UNITS	RATE PER UNIT
VALUATION OF 440000 Pounds	EQUIVALENT UNITS	Rate	Amount
MATERIAL	440000	$                  1.36	$             598,400
LABOR	440000	$                  0.66	$             290,400
Total Value of Units Transferred out	of 440000 Pounds		$             888,800

Answer 5. Prepare a cost reconciliation report for May.

COST RECONCILIATION
COST TO BE ACCOUNTED FOR
FOR OPENING WORK IN PROCESS	$                     147,900
FOR UNITS ADDED	$                     782,375
TOTAL	$                     930,275
COST ACCOUNTED FOR AS FOLLOW
FOR UNITS TRANSFERRED OUT	$                        41,475
FOR CLOSING WORK IN PROCESS	$                     888,800
TOTAL	$                     930,275

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