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 80% complete		10,000
Pounds started into production during May		100,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 20% complete		15,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	1,500
Conversion cost	$	7,200
Cost added during May:
Materials cost	$	154,500
Conversion cost	$	90,800

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

1. Equivalent Units of Production:

Particulars	Equivalent Units of Production
Material	Conversion
Units completed and transferred out (95000*100%) & (95000*100%)	95000	95000
Ending/Closing Work in progress (15000*60%) & (15000*20%)	9000	3000
Total Equivalent Units of Production	104000	98000

2. Cost per Equivalent Unit:

Particulars	Material	Conversion
Cost in Opening WIP	$                     1,500.00	$                     7,200.00
Current Cost	$               1,54,500.00	$                  90,800.00
Total Cost	$               1,56,000.00	$                  98,000.00
Equivalent Units of Production	$               1,04,000.00	$                  98,000.00
Cost per Equivalent Unit	$                             1.50	$                             1.00

3. Cost of Ending WIP:

Particulars	Material	Conversion	Total
Equivalent Units of Ending WIP	9000	3000	-
Cost per Equivalent Unit	$                             1.50	$                             1.00	-
Total Cost of Ending WIP	$                  13,500.00	$                     3,000.00	$ 16,500.00

4. Cost of Units transferred out:

Particulars	Material	Conversion	Total
Equivalent Units of Units completed and transferred out	95000	95000	-
Cost per Equivalent Unit	$                             1.50	$                             1.00	-
Total Cost of Units transferred out	$               1,42,500.00	$                  95,000.00	$ 2,37,500.00

5. Cost Reconciliation Statement:

Particulars	Material	Conversion	Total
Costs incurred:
Opening WIP	$                     1,500.00	$                     7,200.00	$       8,700.00
Current Period Costs	$               1,54,500.00	$                  90,800.00	$ 2,45,300.00
Total			$ 2,54,000.00
Costs accounted/charged:
Units transferred out	$               1,42,500.00	$                  95,000.00	$ 2,37,500.00
Ending WIP	$                  13,500.00	$                     3,000.00	$     16,500.00
Total			$ 2,54,000.00