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		62,000
Pounds started into production during May		270,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 70% complete; conversion 30% complete		22,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	55,100
Conversion cost	$	26,800
Cost added during May:
Materials cost	$	286,570
Conversion cost	$	147,330

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

Unit transferred out = 62000+270000-22000 = 310000 Units

1) Equivalent unit of material = 310000+(22000*70%) = 325400

Equivalent unit of conversion = 310000+(22000*30%) = 316600

2. Compute the cost per equivalent unit for materials and conversion for May.

Material = (55100+286570)/325400 = 1.05

Conversion = (26800+147330)/316600 = 0.55

3. Compute the cost of ending work in process inventory for materials, conversion, and in total for May.

	Material	Conversion	Total
Cost of ending work in process	15400*1.05 = 16170	6600*.55 = 3630	19800

4. Compute the cost of units transferred out to the next department for materials, conversion, and in total for May.

	Material	Conversion	Total
Cost of units transferred out	310000*1.05 = 325500	310000*.55 = 170500	496000

5. Prepare a cost reconciliation report for May.

Cost to be accounted for
Cost of beginning work in process	81900
Cost added	433900
Total cost to be accounted for	515800
Cost accounted as
Cost of units transferred out	496000
Cost of ending work in process	19800
Total cost accounted as	515800