Question

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		81,000
Pounds started into production during May		460,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 80% complete; conversion 20% complete		55,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	158,200
Conversion cost	$	50,500
Cost added during May:
Materials cost	$	822,300
Conversion cost	$	277,520

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	530,000	497,000

.

	Material	Conversion
Cost per equivalent Unit	$                    1.85	$                   0.66

.

	Material	Conversion	Total
Ending Inventory	$ 81,400	$ 7,260	$ 88,660

.

	Material	Conversion	Total
Units Completed and transferred	$ 899,100	$ 320,760	$ 1,219,860

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 208,700
Cost incurred during period	$ 1,099,820
Total cost to be accounted for	$ 1,308,520
Costs accounted for as follows:
Cost of Units Transferred Out	$ 1,219,860
Cost of Ending Wip	$ 88,660
Total cost accounted for	$ 1,308,520

Working

Reconciliation of Units
A	Beginning WIP	81,000
B	Introduced	460,000
C=A+B	TOTAL	541,000
D	Transferred out	486,000
E=C-D	Ending WIP	55,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	486,000			100%	486,000	100%	486,000
Ending WIP	55,000			80%	44,000	20%	11,000
Total	541,000			Total	530,000	Total	497,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 158,200	$ 50,500	$ 208,700
Cost incurred during period		$ 822,300	$ 277,520	$ 1,099,820
Total Cost to be accounted for		$ 980,500	$ 328,020	$ 1,308,520
Total Equivalent Units		530,000	497,000
Cost per Equivalent Units		$                   1.85	$                     0.66	$                2.51

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.85	44,000	$          81,400.00	486,000	$        899,100.00
Conversion cost	$ 0.66	11,000	$             7,260.00	486,000	$        320,760.00
TOTAL	$ 1,308,520	TOTAL	$ 88,660	TOTAL	$ 1,219,860