Question

Problem 4-16A Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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:
Pounds in process, May 1; materials       100% complete; conversion 90% complete		70,000
Pounds started into production during May		350,000
Pounds completed and transferred out		?
Pounds in process, May 31:       materials 70% complete; conversion 30% complete		30,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	86,900
Conversion cost	$	39,300
Cost added during May:
Materials cost	$	451,510
Conversion cost	$	216,060

The company uses the weighted-average method.

Required:

1.	Compute the equivalent units of production.

2.	Compute the costs per equivalent unit for the month. (Round your answers to 2 decimal places.)

3.	Determine the cost of ending work in process inventory and of the units transferred out to the next department. (Round your intermediate calculation to 2 decimal places.)

4.	Prepare a cost reconciliation report for the month. (Do not round your intermediate calculations.)

  

Answer 1

1)
	Equivalent units of production:
	Materials			4,11,000
	Conversion costs			3,99,000
Working:
i.	As per weighted average method, Equivalent units of production:
	Materials		(390000*100%)+(30000*70%)			=	4,11,000
	Conversion costs		(390000*100%)+(30000*30%)			=	3,99,000
ii.	Units completed and transferred out				=	Beginning Work in process Units +Units started during this period-Ending work in processs units
					=	70,000	+	3,50,000	-	30,000
					=	3,90,000
2)
				Materials	Conversion
	Cost per equivalent units			$           1.31	$           0.64
Working:
				Materials	Conversion
	Beginning Work in process			$        86,900	$        39,300
	Costs incurred during this period			$     4,51,510	$     2,16,060
	Total Cost incurred			$     5,38,410	$     2,55,360
	÷ Equivalent Units of production			4,11,000	3,99,000
	Cost per equivalent unit			$           1.31	$           0.64
3)
	Cost of Ending work in process Inventory				33,270
	Costs of Units transferred out to next department				7,60,500
Working:
i.	Cost of Ending work in process Inventory:
			Equivalent Units of Production			Cost per equivalent Units		Total costs
	Materials			21,000		$           1.31		27,510
	Conversions			9,000		$           0.64		5,760
								33,270
ii.	Costs of Units completed and transferred out:
			Equivalent Units of Production			Cost per equivalent Units		Total costs
	Materials			3,90,000		$           1.31		5,10,900
	Conversions			3,90,000		$           0.64		2,49,600
								7,60,500
4)	Cost reconcilation report for the month:
	Beginning Work in process:
	Material			$        86,900
	Conversion costs			$        39,300	$     1,26,200
	Costs incurred during this period
	Material			$     4,51,510
	Conversion costs			$     2,16,060	$     6,67,570
	Total costs to be accounted for					$     7,93,770
	Costs of Ending work in process:
	Material			$        27,510
	Conversion costs			$         5,760	$        33,270
	Costs of Units transferred out:
	Material			$     5,10,900
	Conversion costs			$     2,49,600	$     7,60,500
	Costs accounted for					$     7,93,770