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

		Units
Reconciliation of Units
A	Opening WIP	84,000
B	Introduced	490,000
C=A+B	TOTAL	574,000
D	Transferred	530,000
E=C-D	Closing WIP	44,000

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	530,000	100%	530,000	100%	530,000
Closing WIP	44,000	60%	26,400	40%	17,600
Total	574,000	Total	556,400	Total	547,600

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$        130,200.00	$     21,100.00	$   151,300.00
Cost incurred during period	$        676,580.00	$ 115,800.00	$   792,380.00
Total Cost to be accounted for	$        806,780.00	$ 136,900.00	$   943,680.00
Total Equivalent Units	556,400	547,600
Cost per Equivalent Units	$                1.4500	$           0.2500

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$               1.45	26,400	$     38,280.00	530,000	$ 768,500.00
Conversion Cost	$               0.25	17,600	$       4,400.00	530,000	$ 132,500.00
TOTAL	$ 943,680.00	TOTAL	$     42,680.00	TOTAL	$ 901,000.00

Cost to be accounted for
Beginning Work In Progress:
Cost Transferred	$                   -
Material	$ 130,200.00
Conversion Cost	$    21,100.00	$        151,300.00
Cost incurred during period:
Cost Transferred	$                   -
Material	$ 676,580.00
Conversion Cost	$ 115,800.00	$        792,380.00
Total Cost to be accounted for				$   943,680.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Cost Transferred	-		$                    -
Material	530,000	$                     1.45	$ 768,500.00
Conversion Cost	530,000	$                     0.25	$ 132,500.00
				$   901,000.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Cost Transferred	-	$                          -	$                    -
Material	26,400	$                     1.45	$     38,280.00
Conversion Cost	17,600	$                     0.25	$       4,400.00
				$     42,680.00
Total Cost accounted for				$   943,680.00

1. Equivalent units of production for materials = 556400 units

conversion = 547600 units

2. Cost per equivalent unit for materials = $1.45

conversion = $0.25

3. Cost of ending work in process inventory for materials = $38,280. Conversion = $4400.

4. Cost of units transferred out to the next department for materials = $768,500

Conversion = $132,500.