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 80% complete 10,000 Pounds started into production during May 100,000 Pounds completed and transferred out ? Pounds in process, May 31; materials 60% complete; conversion 20% complete 15,000 Cost data: Work in process inventory, May 1: Materials cost $ 1,500 Conversion cost $ 7,200 Cost added during May: Materials cost $ 154,500 Conversion cost $ 90,800 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

1.

Equivalent units of production (EUP) - Weighted Average method
	Units	% material	EUP-Materials	% Conversion	EUP- Conversion
Units Completed and transferred out (10000+100000-15000)	95000	100%	95000	100%	95000
units of Ending work in process	15000	60%	9000	20%	3000
Equivalent units of production			104000		98000

2.

Cost per Equivalent unit:	Material	Conversion
Cost of Beginning Work in Process	$1,500	$7,200
Cost added	$1,54,500	$90,800
Total Costs	$1,56,000	$98,000
/Equivalent units of Production	104000	98000
Cost per Equivalent unit of Production	$1.50	$1.00

3.

Cost of ending work in process	EUP	Cost per EUP	Total Cost
Material	9000	$1.50	$13,500
Conversion	3000	$1.00	$3,000
Total Ending work in process			$16,500

4.

Cost Assignment and reconciliation
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
Material	95000	$1.50	$1,42,500
Conversion	95000	$1.00	$95,000
Total transferred out			$2,37,500

5.

Cost Reconciliation Report
Particulars	Amount
costs to be accounted for:
Cost of beginning WIP inventory (1500+7200)	$8,700
Cost added to production ($154500+$90800)	$2,45,300
Total Cost to be accounted for	$2,54,000
Costs accounted for as follows:
Cost of unit transferred out	$2,37,500
Cost of Ending WIP	$16,500
Total cost accounted for	$2,54,000