Question

Problem 4-16 (Algo) Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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		85,000
Pounds started into production during May		500,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 80% complete; conversion 20% complete		45,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	135,700
Conversion cost	$	22,000
Cost added during May:
Materials cost	$	705,260
Conversion cost	$	120,740

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

Work in Process, Beginning	85000
Add: Pounds started during May	500000
Less: Ending inventory	-45000
Units completed and transferred out	540000
1
	Materials	Conversion
Units completed and transferred out	540000	540000
Work in process, ending:
45000 X 80%	36000
45000 X 20%		9000
Equivalent units of production	576000	549000
2
	Materials	Conversion
Work in process, May 1	135700	22000
Cost added during May	705260	120740
Total costs	840960	142740
Divide by Equivalent units of production	576000	549000
Cost per Equivalent unit	1.46	0.26
3
	Materials	Conversion	Total
Work in process, ending units	36000	9000
X Cost per Equivalent unit	1.46	0.26
Cost of ending work in process inventory	52560	2340	54900
4
	Materials	Conversion	Total
Units completed and transferred out	540000	540000
X Cost per Equivalent unit	1.46	0.26
Cost of Units completed and transferred out	788400	140400	928800
5
Cost Reconciliation:
Cost to be accounted for:
Cost of Beginning work in Process inventory	157700
Cost added to production during May	826000
Total Cost to be accounted for	983700
Cost accounted for as follows:
Cost of Units completed and transferred out	928800
Cost of ending work in process inventory	54900
Total Cost accounted for	983700