In: Accounting
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: |
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Units in process, May 1: 100% complete as to materials and 80% complete as to labour and overhead |
16,700 |
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Units started into production during May |
127,000 |
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Units completed and transferred out |
117,000 |
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Units in process, May 31: 60% complete as to materials and 20% complete as to labour and overhead |
? |
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Cost data: |
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Work-in-process inventory, May 1: |
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Materials cost |
$ |
2,850 |
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Labour cost |
3,760 |
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Overhead cost |
7,700 |
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Cost added during May: |
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Materials cost |
194,000 |
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Labour cost |
37,600 |
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Overhead cost |
90,400 |
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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 |
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Units to be accounted for: |
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Work in process, May 1 |
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Units brought into production and fully completed during the month |
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Total units |
0 |
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2. Compute the costs per equivalent unit for the month. (Round your answers to 3 decimal places.)
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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"".
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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
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Cost per Equivalent Unit
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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"".
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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 |
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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 |
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Total | 143700 | Total | 133020 | Total | 122340 |
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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 |