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		88,000
Pounds started into production during May		530,000
Pounds completed and transferred out		?
Pounds in process, May 31; materials 60% complete; conversion 40% complete		65,000
Cost data:
Work in process inventory, May 1:
Materials cost	$	106,000
Conversion cost	$	59,700
Cost added during May:
Materials cost	$	551,120
Conversion cost	$	328,230

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

	Material	Conversion
Unit transferred out	553000	553000
Ending WIP	65000*60% = 39000	26000
Equivalent unit of production	592000	579000

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	106000	59700
Cost added	551120	328230
Total Cost	657120	387930
Equivalent unit	592000	579000
Cost per equivalent unit	1.11	0.67

3) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	39000*1.11 = 43290	26000*.67 = 17420	60710

4) Cost of unit transferred out

	Material	Conversion	Total
Cost of unit transferred out	553000*1.11 = 613830	370510	984340

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	165700
Cost added	879350
Total cost to be accounted for	1045050
Cost accounted for
Cost of unit transferred out	984340
Cost of ending WIP	60710
Total Cost accounted for	1045050