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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; conversion 80% complete 10,000
Pounds started into production during May 100,000
Pounds completed and transferred out ?
Pounds in process, May 31 ; materials 60% complete; conversion 20% complete 15,000
Cost data:
Work in process inventory, May 1 :
Materials cost $15,000
Conversion cost
Cost added during May:
Materials cost $154,500
Conversion cost $90,800

The company uses the weighted-average method.

Required:
a. Compute the equivalent units of production.
b. Compute the costs per equivalent unit for the month.
c. Determine the cost of ending work in process inventory and of the units transferred out to the next department.
d. Prepare a cost reconciliation report for the month.

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Respuesta :

Zviko

Answer:

Part a

Materials  = 104,000 units

Conversion Cost =  98,000 units

Part b

Materials  =  $1.50

Conversion Costs  = $1.00

Part c

Cost of ending work in process inventory = $16,500

Cost units transferred out to the next department  = $237,500

Part d

Cost Reconciliation Report

Cost of Beginning Work in Process Inventory            $8,700

Cost added during the Period                                 $245,300

Total                                                                          $254,000

Cost of ending work in process inventory                 $16,500

Cost units transferred out to the next department $237,500

Total                                                                           $254,000

Explanation:

Hi, there are some missing amounts from your question, however I managed to search for the full question online and I have attached it as an image below.

Units transferred out to the next department = 100,000 + 10,000 - 15,000 = 95,000

Equivalent units of production

Materials = 95,000 x 100% + 15,000 x 60 % = 104,000 units

Conversion Cost = 95,000 x 100% + 15,000 x 20 % = 98,000 units

Costs per equivalent

Materials = ($1,500 + $154,500) ÷ 104,000 units =  $1.50

Conversion Costs = ($7,200 + $90,800) ÷ 98,000 units = $1.00

Total unit cost = $1.50 + $1.00 = $2.50

Cost of ending work in process inventory

Cost of ending work in process inventory = Materials cost + Conversion cost

                                                                     = 9,000 x $1.50 + 3,000 x $1.00

                                                                     = $16,500

Cost of units transferred out to the next department.

Cost units transferred out to the next department = units transferred out x total unit cost

                                                                                   = 95,000 x $2.50

                                                                                   = $237,500

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