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

Inside the cost report are the figures for EU cost per EU and ending WIP and transferred-out units.

Physical Unit Information

Units charged to production:

Beginning 81,000

Started 460,000

Total units accounted for by the Department 541000

Units to be assigned costs:

Whole Units Materials Conversion

Beginning 81,000 81000 81000

Started and

completed 405,000 405,000 405,000

transferred 486,000 486,000 486,000

ending 55000 44,000 11,000

Total units to

be assigned costs 541,000 530000 497000

Direct Materials Conversion

Total cost $980,500.00 $328,020.00

Total equivalent units 530000 497000

Cost per equivalent unit $1.850 $0.660

`\left[\begin{array}{cccc}&Direct Materials&Conversion&Total\\$Beginning&158200&50500&208700\\$Costs incurred in July&822300&277520&1099820\\$Total costs accounted for&&&1308520\\$Cost allocated to&&&\\$Beginning&149850&53460&203310\\$Cost of completed WIP&&&203310\\$Started and completed&749250&267300&1016550\\$Transferred to &&&1219860\\$Ending&81400&7260&88660\\$Total assigned by&&&1308520\\\end{array}\right]`

Step-by-step explanation:

Ending Inventory equivalent units:

physical units x percentage of completion

ending 55000 44000 (55,000 x 0.8) 11,000 (55,000 x 0.2)

Then, we add up the total completed units to get the equivalent units

The cost per equivalent untis will be adding the cost of beginning to the added during the period.

Then we multiply for the amount missing of beginning inventory

and for the whole equivalent untis of the ending invnetory and transferred out

As we work with wegihted average Equivalent untis will be complete and transferred plus percentage of completion of the ending WIP inventory