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 84,000 Pounds started into production during May 490,000 Pounds completed and transferred out ? Pounds in process, May 31; materials 60% complete; conversion 40% complete 44,000 Cost data: Work in process inventory, May 1: Materials cost $ 130,200 Conversion cost $ 21,100 Cost added during May: Materials cost $ 676,580 Conversion cost $ 115,800 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

Part 1 - Calculation of Equivalent Units

Step 1 - Calculate the Units completed

Particulars	Pounds
Beginning Work in Process Inventory	84000
Add : Inventory added into Production	490000
Total Pounds work in process	574000
Less : Ending work in process inventory	44000
Pounds completed and Transferred out	530000

Step 2 - Equivalent Units

Particulars	% Material	Material Equivalent Units	% Conversion cost	Conversion Equivalent Units
Units Completed and Transferred (530000 pounds)	100%	530000	100%	530000
Ending Work in process (44000 pounds)	60%	26400	40%	17600
Equivalent Units		556400		547600

Part 2 - Calculation of cost per equivalent unit

Particulars
Beginning Work In process Cost	$130200	$21100
Cost added during May	$676580	$115800
Total cost (A)	$806780	$136900
Equivalent Units (B)	556400	547600
Cost per Equivalent Unit (A/B)	$1.45	$0.25

Part 3 - Cost of Ending work in process Inventory

Particulars	Ending Work in process Inventory	Cost per Equivalent Unit	Total cost
Material	26400	$1.45	$38280
Conversion cost	17600	$0.25	$4400
Total			$42680

Part 4 - Cost of Unit transferred to next department

Particulars	Ending Work in process Inventory	Cost per equivalent Unit	Total cost
Material	530000	$1.45	$768500
Conversion	530000	$0.25	$132500
Total			$901000

Part 5 - Cost Reconciliation Report

Particulars		Amount
Costs of Work in process Inventory and Units completed and Transferred to next department
Cost of Work in process Inventory	$42680
Cost of Units completed and transferred to next Department	$901000	$943680
Costs added during the period and Beginning period Cost
Cost of work in process of beginning Inventory ($130200 + $21100)	$151300
Cost added during may ($676580 + $115800)	$792380	$943680