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 55,000 Pounds started into production during May 330,000 Pounds completed and transferred out ? Pounds in process, May 31; materials 60% complete; conversion 40% complete 15,000 Cost data: Work in process inventory, May 1: Materials cost $ 78,900 Conversion cost $ 23,700 Cost added during May: Materials cost $ 410,010 Conversion cost $ 130,460 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

	Material	Conversion
Equivalent Units of Production	379,000	376,000

.

	Material	Conversion
Cost per equivalent Unit	$ 1.29	$ 0.41

.

	Material	Conversion	Total
Ending Inventory	$ 11,610	$ 2,460	$ 14,070

.

	Material	Conversion	Total
Units Completed and transferred	$ 477,300	$ 151,700	$ 629,000

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 102,600
Cost incurred during period	$ 540,470
Total cost to be accounted for	$ 643,070
Costs accounted for as follows:
Cost of Units Transferred Out	$ 629,000
Cost of Ending Wip	$ 14,070
Total cost accounted for	$ 643,070

Working

Reconciliation of Units
A	Beginning WIP	55,000
B	Introduced	330,000
C=A+B	TOTAL	385,000
D	Transferred out	370,000
E=C-D	Ending WIP	15,000

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	370,000			100%	370,000	100%	370,000
Ending WIP	15,000			60%	9,000	40%	6,000
Total	385,000			Total	379,000	Total	376,000

..

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 78,900	$ 23,700	$ 102,600
Cost incurred during period (B)		$ 410,010	$ 130,460	$ 540,470
Total Cost to be accounted for (C=A+B)		$ 488,910	$ 154,160	$ 643,070
Total Equivalent Units(D)		379,000	376,000
Cost per Equivalent Units (E=C/D)		$ 1.29	$ 0.41	$ 1.70

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.29	9,000	$          11,610.00	370,000	$        477,300.00
Conversion	$ 0.41	6,000	$             2,460.00	370,000	$        151,700.00
TOTAL	$ 643,070	TOTAL	$ 14,070	TOTAL	$ 629,000