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

1. Equivalent units of production :

	Materials	Conversion
transferred to next department *	560000	560000
ending work in process :
materials : 47000 units * 75%	35250
conversion : 47000 units * 25%		11750
equivalent units of production	595250	571750
* units transferred to the next department = units in beginning WIP + units started into production - units in ending WIP = 87000 + 520000 - 47000 = $560000

2.

	Materials	Conversion
cost of beginning WIP	$142100	$63300
cost added during the period	738870	348360
total cost	$880970	$411660
equivalent units of production	595250	571750
cost per equivalent unit	$1.48	$0.72

3.

	Material	Conversion
ending work in process inventory:
equivalent units of production	35250	11750
cost per equivalent unit	$1.48	$0.72
cost of ending WIP inventory	$52170	$8460

4.

	Material	Conversion
units completed and transferred out :
units transferred to next department	560000	560000
cost per equivalent unit	1.48	0.72
cost of units completed and transferred out	$828800	$403200