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		83,000
Pounds started into production during May		480,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 75% complete; conversion 25% complete		43,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	128,300
Conversion cost	$	53,900
Cost added during May:
Materials cost	$	666,940
Conversion cost	$	296,395

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

1) Equivalent unit

	Material	Conversion
Unit transferred out	83000+480000-43000 = 520000	520000
Ending WIP	43000*75% = 32250	10750
Total	552250	530750

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	128300	53900
Cost added	666940	296395
Total Cost	795240	350295
Equivalent unit	552250	530750
Cost per equivalent unit	1.44	0.66

3) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	32250*1.44 = 46440	10750*.66 = 7095	53535

4) Cost of Unit transferred out

	Material	Conversion	Total
Cost of Unit transferred out	520000*1.44 = 748800	520000*.66 = 343200	1092000

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	182200
Cost added	963335
Total cost to be accounted for	1145535
Cost accounted as
Cost of unit transferred out	1092000
Ending WIP	53535
Total cost accounted for	1145535