Question

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

Answer 1

Solution:

Builders Product Inc.
First Department
Computation of Equivalent unit of Production
Particulars	Physical Units	Material	Conversion
Units to account for:
Beginning WIP	16700
Started into Production	127000
Total units to account for	143700
Units accounted for:
Unit completed & Transferred out	117000	117000	117000
Units in ending inventory:	26700
Material (60%)		16020
Conversion (20%)			5340
Equivalent units of production	143700	133020	122340

Builders Product Inc. Computation of Cost per equivalent unit - First department
Particulars	Material	Conversion	Total
Opening WIP	$2,850	$11,460	$14,310
Cost Added during Period	$194,000	$128,000	$322,000
Total cost to be accounted for	$196,850	$139,460	$336,310
Equivalent units of production	133020	122340
Cost per Equivalent unit	$1.480	$1.140

Builder Product Inc. Computation of Cost of ending WIP and units completed & transferred out First Department
Particulars	Material	Conversion	Total
Equivalent unit of Ending WIP	16020	5340
Cost per equivalent unit	$1.480	$1.140
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$23,710	$6,088	$29,797
Units completed and transferred	117000	117000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$173,160	$133,380	$306,540

Cost reconciliation - First Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory	$14,310.00
Cost added to production	$322,000.00
Total Costs to be accounted for	$336,310.00
Costs accounted for as follows:
Cost of unit transferred out	$306,540
Ending WIP:
Material	$23,710
Converison	$6,088
Total Ending WIP	$29,797
Total costs accounted for	$336,337