Question

Maple, Inc. manufactures syrup that goes through three processing stages prior to completion. Information on work in the first department, blending, is given below for August:

Production data:
	Pounds in process, August 1; materials 100% complete; conversion 70% complete	3,000
	Pounds started into production during August	85,000
	Pounds completed and transferred out	?
	Pounds in process, August 31; materials 80% complete; conversion 30% complete	6,000
Cost data:
	Work in process inventory, August 1: Materials cost	$900
	Conversion cost	$5,900
	Cost added during August: Materials cost	$151,000
	Conversion cost	$161,700

The company uses the weighted-average method.

Submit an Excel document with each tab labeled by item number that demonstrates the following:

Compute the equivalent units of production.

Compute the costs per equivalent unit for the month.

Determine the cost of ending work in process inventory and of the units transferred out to the next department.

Prepare a cost reconciliation schedule for the month. What does the cost reconciliation schedule tell us about the company's costs?

Answer 1

Solution:

Computation of Equivalent unit of Production - Weighted Average - First Department
Particulars	Physical Units	Equivalent units
		Material	Conversion
Work in Process, beginning	3000
Started during the current period	85000
Total units to account for	88000
Units accounted for:
Unit completed & Transferred out	82000	82000	82000
Closing WIP:	6000
Material (80%)		4800
Conversion (30%)			1800
Equivalent units of production	88000	86800	83800

Computation of Cost per equivalent unit of Production - Weighted Average - First Department
Particulars	Material	Conversion
Opening WIP	$900.00	$5,900.00
Cost Added during Period	$151,000.00	$161,700.00
Total cost to be accounted for	$151,900.00	$167,600.00
Equivalent units of production	86800	83800
Cost per Equivalent unit	$1.75	$2.00

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average - First Department
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	4800	1800
Cost per equivalent unit	$1.75	$2.00
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$8,400	$3,600	$12,000
Units completed and transferred	82000	82000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$143,500	$164,000	$307,500

Cost reconcilaition - Weighted Average - First department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$6,800.00
Cost added to production	$312,700.00
Total Cost to be accounted for	$319,500.00
Costs accounted for as follows:
Cost of unit transferred out	$307,500
Ending WIP	$12,000
Total cost accounted for	$319,500.00