Question

Problem 4-16 Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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		85,000
Pounds started into production during May		500,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 80% complete; conversion 20% complete		45,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	135,700
Conversion cost	$	22,000
Cost added during May:
Materials cost	$	705,260
Conversion cost	$	120,740

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.

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

	Materials Conversion Equivalent units of production

2.Compute the cost per equivalent unit for materials and conversion for May. (Round your answers to 2 decimal places.)

	Materials Conversion Cost per equivalent unit

3.

Compute the cost of ending work in process inventory for materials, conversion, and in total for May. (Round your intermediate calculations to 2 decimal places.)

	Materials Conversion Total Cost of ending work in process inventory

4. Compute the cost of units transferred out to the next department for materials, conversion, and in total for May. (Round your intermediate calculations to 2 decimal places.)

	Materials Conversion Total Cost of units completed and transferred out

5

Prepare a cost reconciliation report for May. (Round your intermediate calculations to 2 decimal places.)

	Cost Reconciliation Costs to be accounted for: Total cost to be accounted for Costs accounted for as follows: Total cost accounted for

Answer 1

Solution

	Material	Conversion
Equivalent Units of Production	5,76,000	5,49,000

.

	Material	Conversion
Cost per equivalent Unit	$                    1.46	$                   0.26

.

	Material	Conversion	Total
Ending Inventory	$ 52,560	$ 2,340	$ 54,900

.

	Material	Conversion	Total
Units Completed and transferred	$ 788,400	$ 140,400	$ 928,800

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 157,700
Cost incurred during period	$ 826,000
Total cost to be accounted for	$ 983,700
Costs accounted for as follows:
Cost of Units Transferred Out	$ 928,800
Cost of Ending Wip	$ 54,900
Total cost accounted for	$ 983,700

Working

Reconciliation of Units
A	Beginning WIP	85,000
B	Introduced	5,00,000
C=A+B	TOTAL	5,85,000
D	Transferred out	5,40,000
E=C-D	Ending WIP	45,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	5,40,000			100%	5,40,000	100%	5,40,000
Ending WIP	45,000			80%	36,000	20%	9,000
Total	5,85,000			Total	5,76,000	Total	5,49,000

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 135,700	$ 22,000	$ 157,700
Cost incurred during period		$ 705,260	$ 120,740	$ 826,000
Total Cost to be accounted for		$ 840,960	$ 142,740	$ 983,700
Total Equivalent Units		5,76,000	5,49,000
Cost per Equivalent Units		$                   1.46	$                     0.26	$                1.72

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 1.46	36,000	$          52,560.00	5,40,000	$ 788,400
Conversion cost	$ 0.26	9,000	$             2,340.00	5,40,000	$      1,40,400.00
TOTAL	$ 983,700	TOTAL	$ 54,900	TOTAL	$ 928,800