In: Accounting
Builder Products, Inc. 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: | |||
Units in process, May 1: 100% complete as to materials and 80% complete as to labour and overhead | 15,800 | ||
Units started into production during May | 118,000 | ||
Units completed and transferred out | 108,000 | ||
Units in process, May 31: 60% complete as to materials and 20% complete as to labour and overhead | ? | ||
Cost data: | |||
Work-in-process inventory, May 1: | |||
Materials cost | $ | 2,400 | |
Labour cost | 3,040 | ||
Overhead cost | 6,800 | ||
Cost added during May: | |||
Materials cost | 176,000 | ||
Labour cost | 30,400 | ||
Overhead cost | 79,600 | ||
Materials are added at several stages during the cooking process, whereas labour and overhead costs are incurred uniformly. The company uses the weighted average cost method. The company combines labour and overhead into a single cost category—conversion cost.
Required:
Prepare a production report for the cooking department for May. Use
the following three steps in preparing your report:
1. Prepare a quantity schedule and a computation of equivalent units.
2. Compute the costs per equivalent unit for the month. (Round your answers to 3 decimal places.)
3. Using the data from parts (1) and (2), prepare a cost reconciliation. (Round "Cost per equivalent unit" to 3 decimal places and the rest to the nearest dollar amount.)
Note: There is difference of "$139" in both the values due to rounding and we feel a note which reads: "Due to rounding, your "Cost accounted for" may not be equal to "Cost to account for"".
4. Prepare a production report for the cooking department for May. Assuming the company uses the FIFO method. Follow parts (1) to (3). (Leave no cells blank, enter "0" wherever required. Round "Cost per equivalent unit" to 3 decimal places and the rest to the nearest dollar amount.)
Quantity Schedule and Equivalent Units
Cost per Equivalent Unit
Cost Reconciliation
Note: There is difference of "$139" in both the values due to rounding and we feel a note which reads: "Due to rounding, your "Cost accounted for" may not be equal to "Cost to account for"".
Weighted Average Method:
1) | Statement of Quantity Schedule and Equivalent Units | |||||||
Particulars | Units | Particulars | Units | % Mat. | EUP- Mat. | % Conv. | EUP- Conv. | |
Beginning WIP | 15800 | Units completed and transferred out | 108000 | 100% | 108000 | 100% | 108000 | |
Units started into production | 118000 | Units in ending inventory | 25800 | 60% | 15480 | 20% | 5160 | |
133800 | 133800 | 123480 | 113160 |
2) | Cost per Equivalent Unit of Production | |||||||
Materials | Conversion | |||||||
Beginning costs | $ 2,400.00 | $ 9,840.00 | ||||||
During the month costs | $ 1,76,000.00 | $ 1,10,000.00 | ||||||
Total cost | Costs | $ 1,78,400.00 | Costs | $ 1,19,840.00 | ||||
÷ | Equivalent units of production | EUP | 123480 | EUP | 113160 | |||
Cost per equivalent unit of production | $ 1.445 | $ 1.059 |
3) | Cost Assignment and Reconciliation | ||||||
Cost of units transferred out | EUP | Cost/ EUP | Total Cost | ||||
Direct Materials | 108000 | $ 1.45 | $ 1,56,060 | ||||
Conversion | 108000 | $ 1.06 | $ 1,14,372 | ||||
Total costs transferred out | $ 2,70,432 | ||||||
Cost of ending work in process | EUP | Cost/ EUP | Total Cost | ||||
Direct Materials | 15480 | $ 1.45 | $ 22,369 | ||||
Conversion | 5160 | $ 1.06 | $ 5,464 | ||||
Total cost of ending work in process | $ 27,833 |
4) | Production Cost Report | |||
Cost to account for: | ||||
Cost of beginning WIP | $ 12,240 | |||
Cost added during the period | $ 2,86,000 | |||
$ 2,98,240 | ||||
Cost accounted for: | ||||
Cost of units completed | $ 2,70,432 | |||
Cost of units in ending WIP | $ 27,833 | |||
$ 2,98,265 |
FIFO:
1) | Statement of Quantity Schedule and Equivalent Units | |||||||||
Direct Material | Conversion | |||||||||
Particulars | Units | Particulars | Units | % | Units | % | Units | |||
Beginning WIP | 15800 | Units completed: | ||||||||
Units started into production | 118000 | From Beginning WIP | 15800 | - | - | 20% | 3160 | |||
From Units Started | 92200 | 100% | 92200 | 100% | 92200 | |||||
Ending WIP | 25800 | 60% | 15480 | 20% | 5160 | |||||
133800 | 133800 | 107680 | 100520 |
2) | Statement of cost per equivalent production | |||
Element of costs | Units | Costs | Cost/eq. units | |
Direct Material | 107680 | $ 1,76,000.00 | $ 1.634 | |
Conversion | 100520 | $ 1,10,000.00 | $ 1.094 | |
$ 2.729 |
Cost of Finished Goods | ||||
Existing cost of 15800 units = | $ 12,240 | ($ 2400 + $ 3040 + $ 6800) | ||
Cost of Completing 3160 units: | ||||
Conversion cost = | $ 3,457 | (3160 x $ 1.094) | ||
Cost of 92200 units = | $ 2,51,614 | (92200 x $ 2.729) | ||
Total | $ 2,67,311 |
Cost of Ending WIP | |||
Units | Cost/eq. units | Costs | |
Direct Material | 15480 | $ 1.634 | $ 25,294 |
Conversion | 5160 | $ 1.094 | $ 5,645 |
Total | $ 30,939 |
4) | Production Cost Report | |||
Cost to account for: | ||||
Cost of beginning WIP | $ 12,240 | |||
Cost added during the period | $ 2,86,000 | |||
$ 2,98,240 | ||||
Cost accounted for: | ||||
Cost of units completed | $ 2,67,311 | |||
Cost of units in ending WIP | $ 30,939 | |||
$ 2,98,250 |