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		73,000
Pounds started into production during May		380,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 80% complete; conversion 20% complete		33,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	111,600
Conversion cost	$	55,800
Cost added during May:
Materials cost	$	580,320
Conversion cost	$	306,810

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

	Material	Conversion
Unit transferred out	420000	420000
Ending work in process	33000*80% = 26400	33000*20% = 6600
Equivalent unit of production	446400	426600

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

	Material	Conversion
Beginning WIP	111600	55800
Cost added	580320	306810
Total Cost	691920	362610
Equivalent unit of production	446400	426600
Cost per equivalent unit	1.55	0.85

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

	Material	Conversion	Total
Cost of ending work in process	33000*80%*1.55 = 40920	33000*20%*.85 = 5610	46530

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

	Material	Conversion	Total
Cost of unit transferred out	420000*1.55 = 651000	420000*.85 = 357000	1008000

5. Prepare a cost reconciliation report for May.

Cost to be accounted for
Beginning work in process	167400
Cost added	887130
Total Cost to be accounted for	1054530
Cost accounted as
Cost of unit transferred out	1008000
Cost of ending work in process	46530
Total Cost accounted as	1054530