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		60,000
Pounds started into production during May		250,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		20,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	59,000
Conversion cost	$	23,400
Cost added during May:
Materials cost	$	306,420
Conversion cost	$	128,580

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

1. Compute equivalent units of production for materials and conversion in May.

	Whole unit	%	EUP-material	%	EUP-conversion
Unit transferred out	290000	100%	290000	100%	290000
Ending work in process	20000	60%	12000	40%	8000
Equivalent unit of production	310000		302000		298000

2. Compute costs per equivalent unit for materials and conversion for May.

	Material	Conversion
Beginning work in process	59000	23400
Cost added	306420	128580
Total cost	365420	151980
Equivalent unit of production	302000	298000
Cost per equivalent unit	1.21	.51

3. Compute cost of ending work in process inventory for materials, conversion, and in total for May.

	Material	Conversion	Total
Cost of ending work in process	14520	4080	18600

4. Compute cost of units transferred out to the Mixing Department for materials, conversion, and in total for May

	Material	Conversion	Total
Cost of unit transferred out	290000*1.21 = 350900	290000*.51 = 147900	498800

5. Prepare a cost reconciliation report for May

Cost to be accounted for
Beginning work in process	82400
Cost added	435000
Total cost to be accounted for	517400
Cost accounted as
Cost of units transferred out	498800
Cost of ending work in process	18600
Total cost accounted as	517400