Builder Products, Inc., uses the weighted-average method in its process costing

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 ; 90,000 550,000 conversion 90% complete Pounds started into production during May 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 Conversion cost Cost added during May Materials cost Conversion cost $152,300 63,300 791,450 $348,100 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

Explanation / Answer

The equivalent units of production for the month of May Particulars Direct Materials Conversion Total Cost Units % completion Equivalent Units Cost Units % completion Equivalent Units Cost Begining Work in Process inventory                   90,000 100%          90,000     1,52,300      90,000 90%         81,000        63,300 Processed During the month: Units Started                5,50,000 Begining Work in Process inventory                   90,000      90,000 10%            9,000 Units Started & Completed in current month                5,00,000 100%      5,00,000 5,00,000 100%      5,00,000 Units Started & not Complete in current month                   50,000 70%          35,000      50,000 30%         15,000 Equivalent units of processed during the current month      5,35,000      5,24,000 Total Equivalent Units      6,25,000     7,91,450      6,05,000     3,48,100 Total Cost of Production     9,43,750     4,11,400 13,55,150 Costs per equivalent unit of production (943,750/625,000) 1.51 (411,400/605,000) 0.68 Requirement 1 Materials Conversion Equivalent units of production for May                5,35,000            5,24,000 Requirement 2 Materials Conversion Costs per equivalent unit of production                        1.51                     0.68 Requirement 3 Materials Conversion Total Cost of ending work in process inventory                   52,850                10,200          63,050 (35000X1.51) (15000X0.68) Requirement 4 Materials Conversion Total Total cost of units transferred out                8,90,900            4,01,200    12,92,100 (590,000X1.51) (590,000X0.68) Requirement 5 Cost Assignment and Reconciliation Cost of units transferred out EUP Cost per EUP Total Cost    Direct materials                5,90,000 1.51      8,90,900    Conversion                5,90,000 0.68      4,01,200 Total costs transferred out    12,92,100 Costs of ending work in process EUP Cost per EUP Total Cost     Direct materials                   35,000 1.51          52,850     Conversion                   15,000 0.68          10,200 Total cost of ending work in process          63,050 Total costs assigned    13,55,150

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