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		90,000
Pounds started into production during May		550,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 70% complete; conversion 30% complete		50,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	152,300
Conversion cost	$	63,300
Cost added during May:
Materials cost	$	791,450
Conversion cost	$	348,100

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

Units completed and transferred out = (Units in beginning work in process + Units started into production - Units in ending work in process inventory)
=> (90000 + 550000 - 50000)
=> 590000 units

1

Computation of equivalent units

Particulars	Materials	Conversion
Units completed and transferred out	590000	590000
Add: Ending work in process inventory	35000 (50000 X 70%)	15000 (50000 X 30%)
Equivalent units	625000 units	605000 units

2

Computation of cost per equivalent unit

Particulars	Materials	Conversion
Beginning work in process inventory	$152300	$63300
Add: Cost added during may	$791450	$348100
Total cost	$943750	$411400
Equivalent units	625000 units	605000 units
Cost per equivalent unit	$1.51 ($943750 / 625000)	$0.68 ($411400 / 605000)

3

Computation of cost of ending work in process inventory

Particulars	Materials	Conversion	Total
Ending work in process inventory	35000 units	15000 units
Cost per equivalent units	$1.51	$0.68
Cost of ending work in process inventory	$52850	$10200	$63050

4

Computation of cost of units transferred out

Particulars	Materials	Conversion	Total
Ending work in process inventory	590000 units	590000 units
Cost per equivalent units	$1.51	$0.68
Cost of units completed and transferred out	$890900	$401200	$1292100

5

Cost reconciliation

Particulars	Amount ($)
Cost to be accounted for
Cost of beginning work in process inventory	215600 ($152300 + $63300)
Cost added to production	1139550 ($791450 + $348100)
Total cost to be accounted for	1355150
Cost accounted for as follows
Cost of ending work in process inventory	63050
Cost of units completed and transferred out	1292100
Total cost accounted for	1355150

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