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 71,000 Pounds started into production during May 360,000 Pounds completed and transferred out ? Pounds in process, May 31; materials 75% complete; conversion 25% complete 31,000 Cost data: Work in process inventory, May 1: Materials cost $ 90,100 Conversion cost $ 46,400 Cost added during May: Materials cost $ 468,590 Conversion cost $ 255,335 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	423,250	407,750

.

	Material	Conversion
Cost per equivalent Unit	$ 1.32	$ 0.74

.

	Material	Conversion	Total
Ending Inventory	$ 30,690	$ 5,735	$ 36,425

.

	Material	Conversion	Total
Units Completed and transferred	$ 528,000	$ 296,000	$ 824,000

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 136,500
Cost incurred during period	$ 723,925
Total cost to be accounted for	$ 860,425
Costs accounted for as follows:
Cost of Units Transferred Out	$ 824,000
Cost of Ending Wip	$ 36,425
Total cost accounted for	$ 860,425

Working

Reconciliation of Units
A	Beginning WIP	71,000
B	Introduced	360,000
C=A+B	TOTAL	431,000
D	Transferred out	400,000
E=C-D	Ending WIP	31,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	400,000			100%	400,000	100%	400,000
Ending WIP	31,000			75%	23,250	25%	7,750
Total	431,000			Total	423,250	Total	407,750

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 90,100	$ 46,400	$ 136,500
Cost incurred during period (B)		$ 468,590	$ 255,335	$ 723,925
Total Cost to be accounted for (C=A+B)		$ 558,690	$ 301,735	$ 860,425
Total Equivalent Units(D)		423,250	407,750
Cost per Equivalent Units (E=C/D)		$ 1.32	$ 0.74	$ 2.06

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.32	23,250	$          30,690.00	400,000	$        528,000.00
Conversion	$ 0.74	7,750	$             5,735.00	400,000	$        296,000.00
TOTAL	$ 860,425	TOTAL	$ 36,425	TOTAL	$ 824,000