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:

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.

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

5. Prepare a cost reconciliation report for May.

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	3,25,400	3,16,600

.

	Material	Conversion
Cost per equivalent Unit	$                    1.05	$                   0.55

.

	Material	Conversion	Total
Ending Inventory	$ 16,170	$ 3,630	$ 19,800

.

	Material	Conversion	Total
Units Completed and transferred	$ 325,500	$ 170,500	$ 496,000

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 81,900
Cost incurred during period	$ 433,900
Total cost to be accounted for	$ 515,800
Costs accounted for as follows:
Cost of Units Transferred Out	$ 496,000
Cost of Ending Wip	$ 19,800
Total cost accounted for	$ 515,800

Working

Reconciliation of Units
A	Beginning WIP	62,000
B	Introduced	2,70,000
C=A+B	TOTAL	3,32,000
D	Transferred out	3,10,000
E=C-D	Ending WIP	22,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	3,10,000			100%	3,10,000	100%	3,10,000
Ending WIP	22,000			70%	15,400	30%	6,600
Total	3,32,000			Total	3,25,400	Total	3,16,600

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 55,100	$ 26,800	$ 81,900
Cost incurred during period		$ 286,570	$ 147,330	$ 433,900
Total Cost to be accounted for		$ 341,670	$ 174,130	$ 515,800
Total Equivalent Units		3,25,400	3,16,600
Cost per Equivalent Units		$                   1.05	$                     0.55	$                1.60

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.05	15,400	$          16,170.00	3,10,000	$ 325,500
Conversion cost	$ 0.55	6,600	$             3,630.00	3,10,000	$ 170,500
TOTAL	$ 515,800	TOTAL	$ 19,800	TOTAL	$ 496,000