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		90,000
Pounds started into production during May		550,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 70% complete; conversion 30% complete		50,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	152,300
Conversion cost	$	63,300
Cost added during May:
Materials cost	$	791,450
Conversion cost	$	348,100

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.

Answer 1

	1	EQUIVALENT UNITS OF PRODUCTION
		Summery of Physical units and equivalent units calculation
		Units to be accounted for	Phycal units
		Units in the beginning WIP inventory	90000
		Units started during the period	550000
		Total units to be accounted for	640000
				Equivalent units
		Units accounted for	Physical unit	Material	Conversion
		Units completed and transferred out	590000	590000	590000
		Units in ending WIP inventory	50000	50000	15000	(30%*50000)
		Total units accounted for	640000	640000	605000
		EqUIVALENT UNITS OF PRODUCTION(Materials)	640000
		EqUIVALENT UNITS OF PRODUCTION(Conversion)	605000
	2	COST PER EQUIVALENT UNIT
		Summery of costs to be accounted for
		Costs to be accounted for	Materials	Convesrsion	Total
		Cost in beginning WIP	$152,300	$63,300	$215,600
		Costs incurred during the period	$791,450	$348,100	$1,139,550
		Total costs to be accounted for	$943,750	$411,400	$1,355,150
		Calculation of costs per equivalent unit
			Materials	Conversion
		Total costs to be accounted for(a)	$943,750	$411,400
		Total equivalent units accounted for(b)	640000	605000
		Cost per equivalent unit(a)/(b)	$1.47	$0.68
		COST PER EQUIVALENT UNIT(Materials)	$1.47
		COST PER EQUIVALENT UNIT(Conversion)	$0.68
	3	COST OF ENDING WORK IN PROCESS
		Assign costs to Ending WIP
			Materials	Conversion	Total
		Cost assigned to ending WIP	$73,730	$10,200	$83,930
			(50000*1.47)	(15000*0.68)
		COST OF ENDING WORK IN PROCESS(Materials)	$73,730
		COST OF ENDING WORK IN PROCESS(Conversion)	$10,200
	4
		Cost of Ending work in process inventory	$65,922.03
		Cost of units completed and transferred out	$574,797.97
	5	COST OF UNITS TRANSFERRED OUT
			Materials	Conversion	Total
		Costs assigned to units transferred out	$870,020	$401,200	$1,271,220
			(590000*1.47)	(590000*0.68)
		COST OF UNITS TRANSFERRED OUT(Materials)	$870,020
		COST OF UNITS TRANSFERRED OUT(Conversion)	$401,200