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 83.009 480,000 Production data: Pounds in process, May 1; materials 100% complete; conversion 90% complete Pounds started into production during May Pounds completed and transferred out Pounds in process, May 31; materials 75% complete; conversion 25% complete Cost data: Work in process inventory, May 1: Materials cost Conversion cost Cost added during May: Materials cost Conversion cost 43,000 $ 128,300 $ 53,900 $ 666,960 $ 296,395 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.

Compute equivalent units of production:

Particulars	Materials	Conversion
Transferred to next department (83000+480000-43000)	520000	520000
Equivalent units in ending work in process
Materials (43000 * 75%)	32250
Conversion (43000 * 25%)		10750
Equivalent units of production	552250	530750

2.

Compute cost per equivalent units:

Particulars	Materials	Conversion
Cost of beginning work in process	128300	53900
Cost added during the period	666940	296395
Total cost (a)	795240	350295
Equivalent units of production (b)	552250	530750
Cost per equivalent unit (a/b)	1.44	0.66

3.

Compute cost of ending work in process inventory:

Particulars	Materials	Conversion	Total
Ending units in WIP inventory (a)	32250	10750
Cost per equivalent unit (b)	1.44	0.66
Cost of ending WIP inventory (a*b)	46440	7095	53535

4.

Compute cost of units transferred out to next department:

Particulars	Materials	Conversion	Total
Units transferred to next department (a)	520000	520000
Cost per equivalent unit (b)	1.44	0.66
Cost of units completed and transferred out (a*b)	748800	343200	1092000

5.

Prepare cost reconciliation report:

Particulars	Amount
Cost to be accounted for:
Cost of beginning WIP (128300+53900)	182200
Cost added to production (666940+296395)	963335
Total cost to be accounted for	1145535
Cost accounted for:
Cost of ending WIP (46440+7095)	53535
Cost of units completed and transferred out (748800+343200)	1092000
Total cost accounted for	1145535