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: 82,000 470,000 ? 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 70% complete; conversion 30% complete Cost data: Work in process inventory, May 1: Materials cost Conversion cost Cost added during May: Materials cost Conversion cost 42,000 $152,300 $ 52,300 $791,650 $ 287,390 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

Answer

Physical unit

Particulars	$
Beginning work in process	82,000
Units started	470,000
Total units to be accounted	552,000
Units completed and transferred out	510,000
Ending work in process	42,000
Total units to be accounted	552,000

1 Cost per equivalent unit of material

= 510,000 + (42,000 × 70%) = 539,400 units

Cost per equivalent unit of conversion cost

= 510,000 × (42,000 × 30%) = 522,600 units

2 Cost per equivalent unit of material

= (152,300 + 791,650) / 539,400 = $1.75

Cost per equivalent unit of conversion cost

= (52,300 + 287,390) / 522,600 = $0.65

3 cost of ending work in process for material

= (42,000 × 70%) × 1.75 = $51,450

Cost of ending work in process for conversion

= (42,000 × 30%) × 0.65 = $8,190

Cost of ending work in process in total

   = 51,450 + 8,190 = $59,640

4 cost of units transferred out for material

= 510,000 × 1.75 = $892,500

Cost of units transferred out for conversion

= 510,000 × 0.65 = $331,500

Cost of units transferred out in total

   = 892,500 + 331,500 = $1,224,000

5 Cost reconciliation report for May

Particulars	$
Cost of beginning work in process	204,600
Cost added during the period	1,079,040
Total cost to be accounted for	1,283,640
Cost of units transferred out	1,224,000
Cost of ending work in process inventory	59,640
Total cost to be accounted for	1,283,640

The above are the detailed calculations of equivalent units, cost per equivalent units, cost allocated to ending work in process inventory, cost assigned to units completed and transferred out and cost reconciliation report of Builder products.

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