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 Pounds started into production during May Pounds completed and transferred out Pounds in process, May 31; materials 80% complete; conversion 20% complete 81,000 460,000 ? 55,000 Cost data: $ 158,200 $ 50,500 Work in process inventory, May 1: Materials cost Conversion cost Cost added during May: Materials cost Conversion cost $822,300 $ 277,520 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

Answers

• All working forms part of the answer
• [1]

EUP - Weighted Average Method	Units	% Material	EUP Materials	% Conversion	EUP - Conversion
Units TRANSFERRED	486,000	100%	486,000	100%	486,000
Units of ENDING WIP	55,000	100%	55,000	80%	44,000
Equivalent Units of Production			541,000		530,000

• [2]

COST per EUP			Material		Conversion
Cost of Beginning WIP			$        158,200.00		$                                  50,500.00
Cost incurred during the period			$        822,300.00		$                                277,520.00
Total Costs		Costs	$        980,500.00	Costs	$                                328,020.00
Equivalent units of production		EUP	541,000	EUP	530,000
Cost per EUP			$              1.81		$                                      0.62

• [3]

Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Direct Materials	55,000	$                      1.81	$          99,550.00
- Conversion	44,000	$                      0.62	$          27,280.00
Total cost of ending WIP				$            126,830.00

• [4]

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Direct Materials	486,000	$                      1.81	$        879,660.00
- Conversion	486,000	$                      0.62	$        301,320.00
Total Cost transferred Out				$        1,180,980.00

• [5]

Costs to be accounted for:
Cost of Beginning WIP Inventory	$         208,700.00
Cost added to production during the period	$     1,099,820.00
Total Cost to be accounted for	$     1,308,520.00
Costs accounted for as follows:
Cost of units transferred out	$     1,180,980.00
Cost of Ending WIP Inventory	$         126,830.00
Total Cost accounted for	$     1,307,810.00
Difference due to rounding off	$                 710.00