Builder Products, Inc, manufactures a caulking compound that goes through three

Question

Builder Products, Inc, manufactures a caulking compound that goes through three processing stages prior to completon. 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 Pounds started into production during May Pounds completed and transferred out Pounds in process, May 31 370 00 72,000 370,000 materials 60% complete, conversion 40% complete 32,000 Cost data Work in process inventory, May 1 Materials cost Conversion cost 72700 $ 48,800 Cost added during M Materials cost Conversion cost $ 377.960 S268.300 The·company uses the weighted-average method Required: Materials Conversion Equivalent units of production

Explanation / Answer

Solution.

1.

calculate the cost per equivalent unit.

3. Cost of units transferred out. It equals $738,000 [= $1.80 × 410,000].

4. Cost of closing WIP = Costs to be Accounted for Costs Transferred Out

= $767,760 - $738,000 = $29,760

calculate the equivalent units. Transferred- Direct Conversion in Materials Costs Transferred out (A) 370,000 410,000 410,000 Units as at 31 December (B) 32,000 32,000 32,000 Percentage of completion (C) 100% 60% 40% Equivalent units as at 31 Dec (D=B×C) 40,000 19,200 12,800 Total equivalent units (A+D) 410,000 429,200 422,800

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