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		60,000
Pounds started into production during May		250,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		20,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	59,000
Conversion cost	$	23,400
Cost added during May:
Materials cost	$	306,420
Conversion cost	$	128,580

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

Work in Process, Beginning	60000
Add: Pounds started during May	250000
Less: Ending inventory	-20000
Units completed and transferred out	290000
1
	Materials	Conversion
Units completed and transferred out	290000	290000
Work in process, ending:
20000 X 60%	12000
20000 X 40%		8000
Equivalent units of production	302000	298000
2
	Materials	Conversion
Work in process, May 1	59000	23400
Cost added during May	306420	128580
Total costs	365420	151980
Divide by Equivalent units of production	302000	298000
Cost per Equivalent unit	1.21	0.51
3
	Materials	Conversion	Total
Work in process, ending units	12000	8000
X Cost per Equivalent unit	1.21	0.51
Cost of ending work in process inventory	14520	4080	18600
4
	Materials	Conversion	Total
Units completed and transferred out	290000	290000
X Cost per Equivalent unit	1.21	0.51
Cost of Units completed and transferred out	350900	147900	498800
5
Cost Reconciliation:
Cost to be accounted for:
Cost of Beginning work in Process inventory	82400
Cost added to production during May	435000
Total Cost to be accounted for	517400
Cost accounted for as follows:
Cost of Units completed and transferred out	498800
Cost of ending work in process inventory	18600
Total Cost accounted for	517400