Problem 4-16 Comprehensive Problem-Welghted-Average Method [L04-2, LO4-3, LO4-4,

Question

Problem 4-16 Comprehensive Problem-Welghted-Average Method [L04-2, LO4-3, LO4-4, LO4-5] 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 73.000 380,000 100% complete, conversion 90% complete Pounds started into production during May Pounds completed and transferred out Pounds in process, May 31: materials 80% complete, conversion 20% 33,000 complete Cost data Work in process inventory, May 1: $111,600 s 55,800 Materials cost Conversion cost Cost added during May. 580,320 Materials cost s 306,810 Conversion cost The company uses the weighted-average method.

Explanation / Answer

1) Equivalent unit of production :

2) cost per equivalent unit :

3) Cost of ending work in process inventory = (33000*80%*1.55+33000*20%*.85) = $46530

Cost of units completed and transferred out (1.55+0.85)*420000 = 1008000

4) Cost reconciliation report :

material Conversion Unit transferred out 420000 420000 Ending work in process unit 33000*80% = 26400 33000*20% = 6600 Equivalent unit of production 446400 426600

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