Problem 416 Comprehensive ProblemWeightedAverage Method LO42

Problem 4-16 Comprehensive Problem-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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:

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.

Production data:
Pounds in process, May 1; materials 100% complete; conversion 90% complete		90,000
Pounds started into production during May		550,000
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	$	152,300
Conversion cost	$	63,300
Cost added during May:
Materials cost	$	791,450
Conversion cost	$	348,100

Solution

UNITS TO ACCOUNT FOR: Beginning Work in Process units 90,000 Add: Units Started in Process 550,000 Total Units to account for: 640,000 UNITS TO BE ACCOUNTED FOR: Units started and completed 590,000 Ending Work in Process 50,000 Total Units to be accounted for: 640,000 Equivalent Units: Material Cost Conversion % Completion Units % Completion Units Units started and completed 100% 590,000 100% 590,000 Ending Work in Process 70% 35,000 30% 15,000 Total Equivalent units 625,000 605,000 TOTAL COST TO ACCOUNT FOR: Material Conversion Beginning work in Process 152,300 63,300 Cost Added during May 791,450 348,100 Total Cost to account for: 943,750 411,400 Total Cost to account for: 1,355,150 COST PER EQUIVALENT UNIT: Material Conversion Total cost added during the year 943,750 411,400 Equivalent Units 625,000 605,000 Cost per Equivalent unit 1.51 0.68 TOTAL COST ACCOUNTED FOR: Units started and Transferred out (590000 units) Equivalent unit Cost per EU Total Cost Material 590,000 1.51 890900 Conversion Cost 590,000 0.68 401200 Total Cost of Units completed and transferred out: 1292100 Ending Work in process (50,000 units) Equivalent unit Cost per EU Total Cost Material 35,000 1.51 52850 Conversison Cost 15,000 0.68 10200 Total cost of Ending Work in process: 63,050 Req 1. Material Conversion Equivalent units 625000 605000 Req 2: Material Conversion Cost per unit 1.51 0.68 Req 3: material Conversion Total Cost of Ending inventory 890900 401200 1292100 Req 4 material Conversion Total Cost of tranefrred out units 52850 10200 63050 Req 5 Cost reconciliation: Total cost to be accounted for: Beginning WIP 215600 Current cost 1139550 Total cost to be accounted for: 1355150