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		88,000
Pounds started into production during May		530,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		65,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	106,000
Conversion cost	$	59,700
Cost added during May:
Materials cost	$	551,120
Conversion cost	$	328,230

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:

Computation of Equivalent unit of Production (First Department)
Particulars	Physical Units	Material	Conversion
Unit completed & Transferred out (88000 + 530000 - 65000)	553000	553000	553000
Closing WIP:	65000
Material (60%)		39000
Conversion (40%)			26000
Equivalent units of production	618000	592000	579000

Computation of Cost per equivalent unit of Production (First Department)
Particulars	Material	Conversion
Opening WIP	$106,000.00	$59,700.00
Cost Added during May	$551,120.00	$328,230.00
Total cost to be accounted for	$657,120.00	$387,930.00
Equivalent units of production	592000	579000
Cost per Equivalent unit	$1.11	$0.67

Computation of Cost of ending WIP and units completed & transferred out (First Department)
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	39000	26000
Cost per equivalent unit	$1.11	$0.67
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$43,290	$17,420	$60,710
Units completed and transferred	553000	553000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$613,830	$370,510	$984,340

Cost Reconciliation - First Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($106,000 + $59,700)	$165,700.00
Cost added to production ($551,120 + $328,230)	$879,350.00
Total Cost to be accounted for	$1,045,050.00
Costs accounted for as follows:
Cost of unit transferred out	$984,340
Ending WIP:
Material	$43,290
Converison	$17,420
Total cost accounted for	$1,045,050