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: 79,000 440,000 ? 39,000 Production data: Pounds in process, May 1; materials 100% complete; conversion 901 complete Pounds started into production during May Pounds completed and transferred out Pounds in process, May 31; materials 758 complete; conversion 256 complete Cost data: Work in process inventory, May 1: Materials cost Conversion cost Cost added during May: Materials cost Conversion cost $100,200 $ 12,100 $521,085 $ 66,260 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

Physical unit

Particulars	units
Beginning work in process inventory	79,000
Units started into production	440,000
Total units to be accounted	519,000
Units completed and transferred out	480,000
Ending work in process	39,000
Total units to be accounted	519,000

1 EQUIVALENT UNIT

	Direct material	conversion cost
Units completed	480,000	480,000
Ending work in process	29,250 (39,000 × 75%)	9,750 (39,000 × 75%)
Equivalent units	509,250	489,750

Equivalent unit of conversion is 489,750 and material is 509,250.

2 COST PER EQUIVALENT UNIT

	Direct material	conversion cost
Beginning work in process	100,200	12,100
+ cost added during the period	521,085	66,260
Total cost to be accounted	621,285	78,360
÷ Equivalent units	509,250	489,750
Cost per equivalent unit	1.22	0.16

3 Cost allocation to ending inventory

	Direct material	Conversion cost	Total cost
Ending inventory	35,685 (29,250 × 1.22)	1,560 (9,750 × 0.16)	37,245 (35,685 + 1,560)

Cost in material is $35,685

Cost in conversion is $1,560

Total cost in ending work in process is $37,245.

4 Cost assigned to Units completed

	Direct material	Conversion cost	Total cost
Units completed	585,600 (480,000 × 1.22)	76,800 (480,000 × 0.16)	662,400 (585,600 + 76,800)

Cost in material is $585,600

Cost in conversion is $76,800

Total cost us assigned to units completed is $662,400.

5 COST RECONCILIATION REPORT IN MAY

Beginning work in process cost	112,300
Cost added during the period	587,345
Total cost to be accounted	699,645
Cost of units transferred out	662,400
Ending work in process cost	37,245
Total cost to be accounted	699,645

Cost per equivalent units is finded by dividing cost of beginning work in process inventory plus cost added during the period dividend by equivalent units.

Units completed and transferred out for the month of May is 480,000 units.

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