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 67,000 Pounds started into production during May 320,000 Pounds completed and transferred out ? Pounds in process, May 31; materials 75% complete; conversion 25% complete 27,000 Cost data: Work in process inventory, May 1: Materials cost $ 78,500 Conversion cost $ 20,300 Cost added during May: Materials cost $ 408,220 Conversion cost $ 111,730 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

1) Equivalent unit = Unit completed and transferred out+(Ending work in process*percent completion)

Material = 360000+(27000*75%) = 380250 unit

Conversion cost = 360000+(27000*25%) = 366750 unit

2) Calculate cost per equivalent unit :

Material = (78500+408220)/380250 = 1.28

Conversion cost = (20300+111730)/366750 = 0.36

3) Cost of ending work in process = (27000*75%*1.28+27000*25%*0.36) = 28350

4) Cost of unit transferred out = (1.28+0.36)*360000 = 590400

5) Cost reconciliation report :

Cost to be accounted for
Beginning work in process	98800
Cost added during production	519950
Total cost to be accounted for	618750
Cost accounted as
Cost of units transferred out	590400
Cost of ending work in process	28350
Total cost accounted as	618750