Question

Builder Products, Inc., 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		80,000
Pounds started into production during May		450,000
Pounds completed and transferred out		?
Pounds in process, May 31:       materials 60% complete; conversion 40% complete		40,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	116,900
Conversion cost	$	35,800
Cost added during May:
Materials cost	$	607,840
Conversion cost	$	196,960

The company uses the weighted-average method.

Required:

1.	Compute the equivalent units of production.

2.	Compute the costs per equivalent unit for the month. (Round your answers to 2 decimal places.)

3.	Determine the cost of ending work in process inventory and of the units transferred out to the next department. (Round your intermediate calculation to 2 decimal places.)

4.	Prepare a cost reconciliation report for the month. (Do not round your intermediate calculations.)

  

Answer 1

1) Unit transferred out = 80000+450000-40000 = 490000 Units

Equivalent unit of material = 490000+(40000*60%) = 514000 Units

Equivalent unit of conversion = 490000+(40000*40%) = 506000 Units

2) Cost per equivalent unit :

Material = (116900+607840)/514000 = 1.41

Conversion = (35800+196960)/506000 = 0.46

3) Cost of ending inventory = (24000*1.41+16000*.46) = $41200

Cost of unit transferred out = (1.41+.46)*490000 = $916300

4) Cost reconciliation

Cost to be accounted for
Beginning WIP (116900+35800)	152700
Cost added (607840+196960)	804800
Total Cost to be accounted for	957500
Cost accounted as
Cost of unit transferred out	916300
Cost of ending work in process	41200
Total Cost accounted as	957500