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

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..... Please explain how to solve this?

Answer 1

1.Total Equivalent Units Materials 104,000 Conversion 98000

2. Cost per Equivalent Unit Materials $ 1.5 Conversion $ 1

3. Materials Cost Ending Work in Process 13,500

4. Cost Of Units Transferred Out = $237,500

5. Both calculated and cost accounted are same. Mat. $ 156,000 Conversion $ 98000

Step-by-step explanation:

The complete data is as follows:

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 31 May : Materials 60 % , Conversion 20 % complete 15000

Cost Data

Work In Process May 1

Materials cost $ 1500

Conversion Cost $ 72 00

Cost Added During May

Materials cost $ 154,500

Conversion Cost $ 90,800

Solution

Builder Products, Inc.,

Weighted-Average Method

1. Equivalent Units

Particulars Units % of Completion Equivalent Units

Materials Conversion Materials Conversion

Transferred Out 95000 100 100 95000 95000

Ending WIP 15000 60 20 9000 3000

Total Equivalent Units 104,000 98000

Transferred Out units are calculated by adding Opening Inventory and production started and subtracting ending inventory units.

Transferred Out units = Opening Inventory+ production started -ending inventory units

Transferred Out units =10,000 + 100,00 - 15000= 95000 units.

2. Cost Per Equivalent Units

Materials Conversion

Cost Of Opening Inventory 1500 7200

Cost Added 154500 90800

Total Costs 156000 98000

Equivalent Units 104000 98000

Cost per Equivalent Unit 156000/104000 98000/98000

$ 1.5 $1.0

3. Cost of Ending Work In Process $ 16500

Materials = 9000 * $ 1.5= $ 13500

Conversion = 3000 * $ 1.0= $3000

We multiply the equivalenr number of units with the cost per unit to find the cost.

4. Cost Of Units Transferred Out = $237,500

Materials == 95 000 * $ 1.5= $ 142,500

Conversion = 95000 * $ 1.0= $ 95000

5. A Cost Reconciliation Report

Materials Conversion

Ending WIP 13500 3000

Transferred Out 142500 95000

Total 156000 98000

These calculated costs reconcile with the costs given in the above data.

Materials Conversion

Cost Of Opening Inventory 1500 7200

Cost Added 154500 90800

Total Costs 156000 98000