Question

Kimbeth Manufacturing uses a process cost system to manufacture Dust Density for the mining industry. The following information pertains to operations for the month of May 2015:

Units
Beginning work-in-process, May 1 16,000
Started in production during May 100,000
Completed production during May 92,000
Ending work-in-process inventory, May 31 24,000
The beginning inventory was 60% complete for materials and 20% for conversion costs. The ending inventory was 90% complete for materials and 40% complete for conversion costs.
Costs pertaining to the month of May are as follows:
Beginning inventory costs are materials, $54,560;
conversion costs $35,560.
Costs incurred during May are materials used, $468,000;
conversion costs $574,040.

Using the weighted-average method, prepare a complete production cost report showing the computations of:
1) equivalent units of production for materials and conversion costs,
2) the costs per equivalent unit for materials and conversion costs for the month,
3) the cost of ending work-in-process inventory and the cost of the units transferred out to the next department, and
4) a cost reconciliation report for the month.

Answer 1

This solution provides the steps to calculate a production cost report for Kimbeth Manufacturing using the weighted-average method, including the computation of equivalent units, costs per equivalent unit, cost of ending work-in-process, units transferred out, and a cost reconciliation report for the month.

Step-by-step explanation:

The complete production cost report for Kimbeth Manufacturing for May 2015 using the weighted-average method can be calculated as follows:

1. Equivalent units of production for materials: Beginning WIP (9,600) + Started and completed (92,000) + Ending WIP (21,600) = 123,200 units.
   For conversion costs: Beginning WIP (3,200) + Started and completed (92,000) + Ending WIP (9,600) = 104,800 units.
2. The costs per equivalent unit for materials is computed by dividing the total materials costs by the equivalent units of materials, and similarly, for conversion costs, it is the total conversion costs divided by the equivalent units of conversion costs.
3. The cost of ending work-in-process inventory and the cost of units transferred out are calculated by applying the cost per equivalent unit to the respective equivalent units.
4. A cost reconciliation report verifies that the total costs accounted for in the production process equals the total costs incurred.

These computations would yield the amount for Kimbeth Manufacturing's cost of ending work-in-process, cost of units transferred out, and provide a detailed cost reconciliation for the month.