Question

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		87,000
Pounds started into production during May		520,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 75% complete; conversion 25% complete		47,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	142,100
Conversion cost	$	63,300
Cost added during May:
Materials cost	$	738,870
Conversion cost	$	348,360

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

Weighted-Average Method

1.	Equivalent units of production
		Materials	Conversion
	Transferred to next department*...................	560,000	560,000
	Ending work in process:
	Materials: 47,000 units x 75% complete.......	35,250
	Conversion: 47,000 units x 25% complete....		11,750
	Equivalent units of production......................	595,250	571,750

    *Units transferred to the next department = Units in beginning work in process + Units started into production − Units in ending work in process = 87,000 + 520,000 − 47,000 = 560,000

2.	Cost per equivalent unit
		Materials	Conversion
	Cost of beginning work in process..............	$   142,100	$  63,300
	Cost added during the period....................	738,870	348,360
	Total cost (a)...........................................	$880,970	$411,660
	Equivalent units of production (b)..............	595,250	571,750
	Cost per equivalent unit, (a) ÷ (b).............	$1.48	$0.72

3.

	Materials	Conversion	Total
Ending work in process inventory:
Equivalent units of production.	35,250	11,750
Cost per equivalent unit.........	$1.48	$0.72
Cost of ending work in process inventory............................	$52,170	$8,460	$60,630

4.

Units completed and transferred out:
Units transferred to the next department.........................	560,000	560,000
Cost per equivalent unit.........	$1.48	$0.72
Cost of units completed and transferred out....................	$828,800	$403,200	$1,232,000

5.

	Cost Reconciliation
	Costs to be accounted for:
	Cost of beginning work in process inventory ($142,100 + $63,300)............................................................	$   205,400
	Costs added to production during the period ($738,870+$348,360)...........................................................	1,087,230
	Total cost to be accounted for................................................	$1,292,630
	Costs accounted for as follows:
	Cost of ending work in process inventory...............................	$ 60,630
	Cost of units completed and transferred out..........................	1,232,000
	Total cost accounted for.........................................................	$1,292,630