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		63,000
Pounds started into production during May		280,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 75% complete; conversion 25% complete		23,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	67,500
Conversion cost	$	29,100
Cost added during May:
Materials cost	$	350,690
Conversion cost	$	159,835

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

Solution:

1. Compute the equivalent units of production for materials and conversion for May.

Details	Whole units	Percentage	Material	Percentage	Conversion cost
Units transferred out	320,000	100%	320,000	100%	320,000
Ending work in process	23,000	75%	17,250	25%	5,750
Total Equivalent units			337,250		325,750

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

Details	Material	Conversion cost
Work in process beginning	$67,500	$29,100
During the period	$350,690	$159,835
Total Cost	$418,190	$188,935
Equivalent unit	337,250	325,750
Cost per equivalent unit	$1.24	$0.58

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

	Ending work in process
Material (23,000*$1.24*75%)	$21,390
Conversion cost (23,000*0.58*25%)	$3,335
Total Ending work in process	$24,725

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

	Units transferred out
Material (320,000*$1.24)	$396,800
Conversion cost (320,000*$0.58)	$185,600
Total units transferred out	$582,400

5. Prepare a cost reconciliation report for May.

Details	Amount($)
Cost to be accounted for:
Work in process beginning (67,500+29,100)	$96,600
During the period	$510,525
Total Cost to be accounted for	$607,125
Cost accounted for as follows:
Units transferred out	$582,400
Work in process ending	$24,725
Total cost accounted for	$607,125