Question

Problem 4-16 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		79,000
Pounds started into production during May		440,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 75% complete; conversion 25% complete		39,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	100,200
Conversion cost	$	12,100
Cost added during May:
Materials cost	$	521,085
Conversion cost	$	66,260

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) Equivalent unit

	Whole Unit	% material	EUP-Material	% Conversion	EUP-Conversion
Unit transferred out	480000	100%	480000	100%	480000
Ending WIP	39000	75%	29250	25%	9750
Equivalent unit	519000		509250		489750

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	100200	12100
Cost added	521085	66260
Total Cost	621285	78360
Equivalent unit	509250	489750
Cost per equivalent unit	1.22	0.16

3) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	29250*1.22 = 35685	9750*.16 = 1560	37245

4) Cost of Unit transferred out

	Material	Conversion	Total
Cost of Unit transferred out	585600	76800	662400

5) Cost report

Cost to be accounted for
Beginning WIP	112300
Cost added	587345
Total Cost to be accounted for	699645
Cost accounted as
Cost of unit transferred out	662400
Cost of ending WIP	37245
Total Cost accounted as	699645