Question

Purry Pulp makes 100% natural, biodegradable litter that is sold in pet stores across the nation. While still a small company, PP needs to track inventory on a monthly basis for reports sent to current and potential investors. Processing information related to May is included below.

	Tons	Percent Complete Materials	Percent Complete Conversion	Material Cost	Conversion Cost
WIP, May 1	5,000	100%	50%	$94,000	$133,000
Started/Incurred	15,000			$230,000	$376,000
WIP, May 31	3,000	100%	40%

Problem: Using process costing techniques, compute the ending work-in-process inventory values and costs for materials transferred into finished goods. Use only the Weighted Average Method of process costing.

Answer 1

		Units
Reconciliation of Units
A	Opening WIP	5,000
B	Introduced	15,000
C=A+B	TOTAL	20,000
D	Transferred	17,000
E=C-D	Closing WIP	3,000

Statement of Equivalent Units
		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	17,000	100%	17,000	100%	17,000
Closing WIP	3,000	100%	3,000	40%	1,200
Total	20,000	Total	20,000	Total	18,200

Cost per Equivalent Units
COST	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$          94,000.00	$            133,000.00	$          227,000.00
Cost incurred during period	$        230,000.00	$            376,000.00	$          606,000.00
Total Cost to be accounted for	$        324,000.00	$            509,000.00	$          833,000.00
Total Equivalent Units	20,000	18,200
Cost per Equivalent Units	$              16.2000	$                  27.9670

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$            16.20	3,000	$     48,600.00	17,000	$ 275,400.00
Conversion Cost	$            27.97	1,200	$     33,560.44	17,000	$ 475,439.56
TOTAL	$ 833,000.00	TOTAL	$     82,160.44	TOTAL	$ 750,839.56

Cost to be accounted for
Beginning Work In Progress:
Material	$    94,000.00
Conversion Cost	$ 133,000.00	$        227,000.00
Cost incurred during period:
Material	$ 230,000.00
Conversion Cost	$ 376,000.00	$        606,000.00
Total Cost to be accounted for				$   833,000.00

Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	17,000	$   16.20	$ 275,400.00
Conversion Cost	17,000	$    27.97	$ 475,439.56
				$   750,839.56
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	3,000	$    16.20	$     48,600.00
Conversion Cost	1,200	$    27.97	$     33,560.44
				$     82,160.44
Total Cost accounted for				$   833,000.00

While using weighted average method Percentage of goods completed in beginning inventory is not considered for any calculations