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 70% complete; conversion 30% complete 50,000
Cost data:
Work in process inventory, May 1:
Materials cost $152,300
Conversion cost $63,300
Cost added during May:
Materials cost $791,450
Conversion cost $348,100

Required:

a. Compute the equivalent units of production for materials and conversion for May.
b. Compute the cost per equivalent unit for materials and conversion for May.
c. Compute the cost of ending work in process inventory for materials, conversion, and in total for May.
d. Compute the cost of units transferred out to the next department for materials, conversion, and in total for May.
e. Prepare a cost reconciliation report for May.

Answer 1

a. Equivalent units

Materials = Beginning inventory + Units started and completed + Ending Inventory

Units started and completed = Pounds started into production - Pounds in process

= 100,000 - 50,000 = 50,000

= 10,000 + 50,000 + (70% * 50,000)

= 95,000

Conversion

= 10,000 + 50,000 + (30% * 50,000)

= 75,000

b. Material Cost per equivalent unit = Material cost/ Equivalent material units

= (Beginning material cost + Cost during May) / 95,000

= (152,300 + 791,450)/95,000

= $9.93

Conversion cost per Equi unit = Conversion cost/ Equivalent Conversion units

= (63,300 + 348,100)/75,000

= $5.49

c. Cost of Ending WIP Material = Material ending WIP * Cost per equivalent unit

= (70% * 50,000) * 9.93

= $‭347,550‬

Cost of Ending WIP Conversion = Conversion ending WIP * Cost per equivalent unit

= (30% * 50,000) * 5.49

= $‭82,350‬

Total = ‭347,550‬ + 82,350‬ = $‭429,900‬

d. Units completed and transferred out = Beginning WIP inventory + Units started during May - Ending inventory

= 10,000 + 100,000 - 50,000

= 60,000

Materials cost transferred

= 60,000 *9.93

= $‭595,800‬

Conversion Cost transferred

= 60,000 * 5.49

= $‭329,400‬

Total = 595,800‬ + 329,400‬ = $‭925,200‬

e.

Beginning WIP inventory(152,300 + 63,300) $‭215,600‬

Current costs (791,450 + 348,100) $‭1,139,550‬

Total costs $‭1,355,150‬

Cost accounted:

Cost of units completed and transferred $‭925,200

Cost of ending work in process $‭429,900‬

Total costs accounted for $‭1,355,150