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		60,000
Pounds started into production during May		250,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		20,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	59,000
Conversion cost	$	23,400
Cost added during May:
Materials cost	$	306,420
Conversion cost	$	128,580

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

1.

	Equivalent Units	Equivalent Units
	Materials	Conversion
Beginning WIP inventory	60,000	60,000
Started & completed (250,000-20,000)	230,000	230,000
Ending inventory (20,000*60%),(20,000*40%)	12,000	8,000
Units accounted for	302,000	298,000

2.

	Materials	Conversion
Beginning WIP inventory	59,000	23,400
Current costs	306,420	128,580
Total cost to account for	365,420	151,980
Divided by Equivalent units	302,000	298,000
Cost per Equivalent unit	1.21	0.51

3.

Ending Work in process:
Material (12,000*1.21)	14,520
Conversion (8,000*0.51)	4,080
Total Ending Work in process	18,600

4. Units completed and transferred

Beginning WIP inventory	60,000
Add: Units started during May	250,000
Less: Ending inventory	(20,000)
Units completed and transferred	290,000

Cost of units completed and transferred

Material (290,000*1.21)	350,900
Conversion (290,000*0.51)	147,900
Total	498,800

5.

Cost to be accounted for:
Beginning WIP inventory (59,000+23,400)	82,400
Current costs (306,420+128,580)	435,000
Total costs to be accounted for	517,400
Cost accounted for as follows:
Cost of units completed and transferred	498,800
Cost of ending work in process	18,600
Total costs accounted for	517,400