Question

In: Accounting

Builder Products, Inc. manufactures a caulking compound that goes through three processing stages prior to completion....

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

16,700

Units started into production during May

127,000

Units completed and transferred out

117,000

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

$

2,850

Labour cost

3,760

Overhead cost

7,700

Cost added during May:

Materials cost

194,000

Labour cost

37,600

Overhead cost

90,400

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.

Quantity Schedule

Units to be accounted for:

Work in process, May 1

Units brought into production and fully completed during the month

Total units

0

Equivalent Units (EU)
Units Materials Labour Overhead
Units accounted for as follows:
Transferred out
Units brought into production and fully completed during the month
Total units and equivalent units of production 0 0 0 0

  

2. Compute the costs per equivalent unit for the month. (Round your answers to 3 decimal places.)

Materials Labour Overhead
Costs per equivalent unit

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 "$28" 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"".

Equivalent Units (EU)
Total Cost Materials Labour Overhead
Cost accounted for as follows:
Work in process, May 31:
Total work in process 0
Total cost $0

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

Quantity Schedule
Units to be accounted for:
Total units 0
Equivalent Units (EU)
Units Materials Labour Overhead
Units accounted for as follows:
Total units and equivalent units of production 0 0 0 0

Cost per Equivalent Unit

Materials Labour Overhead
Costs per equivalent unit

Cost Reconciliation

Note: There is difference of "$28" 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"".

Equivalent Units (EU)
Total Cost Materials Labour Overhead
Cost accounted for as follows:
Prior period cost in Work in Process, May 1 $14,310
Cost incurred during May:
To complete units in Work in Process, May 1
Total 0
To partially complete units in Work in Process, May 31
Total 0
Total cost $14,310
Cost transferred out, May 31 $14,310

Solutions

Expert Solution

SOLUTION:

Reconciliation of Units
A Beginning WIP 16700
B Started into production 127000
C=A+B TOTAL 143700
D Completed & Transferred out 117000
E=C-D Ending WIP 26700

.

Statement of Equivalent Units(Weighted average)
Material Conversion cost
Units Complete % Equivalent units Complete % Equivalent units
Transferred out 117000 100% 117000 100% 117000
Ending WIP 26700 60% 16020 20%

5340

Total 143700 Total 133020 Total 122340

.

Cost per Equivalent Units (Weighted average)
COST Material Conversion cost TOTAL
Beginning WIP Inventory Cost $ 2850 $ 11460 $ 14310
Cost incurred during period $ 194000 $ 128000 $ 322000
Total Cost to be accounted for $ 196850 $ 139460 $ 336310
Total Equivalent Units 133020 122340
Cost per Equivalent Units $ 1.48 $ 1.14 $ 2.62
Statement of cost (Weighted average)
Cost Equivalent Cost/unit Ending WIP Transferred
Units Cost Allocated Units Cost Allocated
Material $ 1.48 16020 $ 23700 117000 $ 173160
Conversion cost $ 1.14 5340 $ 6070 117000 $ 133380
TOTAL $ 336310 TOTAL $ 29770 TOTAL $ 306540

Cost Reconciliation:

Costs to be accounted for:
Beginning WIP Cost 14310
Cost incurred during period 322000
Total cost to be accounted for 336310
Cost accounted for as follows
Cost of units transferred out 306540
Cost of ending WIP 29770
Total cost accounted for 336610

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