The PVC Company manufactures a high-quality plastic pipe 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 90% complete | 60,000 | |
| Pounds started into production during May | 250,000 | |
| Pounds completed and transferred to the next department | ? | |
| Pounds in process, May 31: materials 60% complete; conversion 40% complete | 20,000 | |
| Cost data: | ||
| Work in process inventory, May 1: | ||
| Materials cost | $ | 59,000 |
| Conversion cost | $ | 23,400 |
| Cost added during May: | ||
| Materials cost | $ | 306,420 |
| Conversion cost | $ | 128,580 |
| The company uses the weighted-average method. |
| Required: |
| 1. | Compute the equivalent units of production. |
| Materials | Conversion | |
| Equivalent units of production | ||
| 2. |
Compute the costs per equivalent unit for the month. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
|
| Materials | Conversion | |
| Cost per equivalent unit | $ | $ |
| 3. |
Determine the cost of ending work in process inventory and of the units transferred out to the next department. (Omit the "$" sign in your response.)
|
| Materials | Conversion | Total | |
| Cost of ending work in process inventory | $ | $ | $ |
| Cost of units completed and transferred out | $ | $ | $ |
| 4. |
Prepare a cost reconciliation report for the month. (Omit the "$" sign in your response.)
|
| Cost Reconciliation | |
| Costs to be accounted for: | |
| Cost of beginning work in process inventory | $ |
| Costs added to production during the period | |
| Total cost to be accounted for | $ |
| Costs accounted for as follows: | |
| Cost of ending work in process inventory | $ |
| Cost of units completed and transferred out | |
| Total cost accounted for | $ |
Explanation:
Weighted-Average Method
1.
2.
3.
4.
1.
| Equivalent units of production |
| Materials | Conversion | |
| Transferred to next department* | 290,000 | 290,000 |
| Ending work in process: | ||
| Materials: 20,000 units × 60% complete | 12,000 | |
| Conversion: 20,000 units × 40% complete | 8,000 | |
| Equivalent units of production | 302,000 | 298,000 |
*Units
transferred to the next department = Units in beginning work in process
+ Units started into production − Units in ending work in process =
60,000 + 250,000 − 20,000 = 290,000
|
2.
| Cost per equivalent unit |
| Materials | Conversion | |||
| Cost of beginning work in process | $ | 59,000 | $ | 23,400 |
| Cost added during the period | 306,420 | 128,580 | ||
| Total cost (a) | $ | 365,420 | $ | 151,980 |
| Equivalent units of production (b) | 302,000 | 298,000 | ||
| Cost per equivalent unit, (a) ÷ (b) | $ | 1.21 | $ | 0.51 |
3.
| Cost of ending work in process inventory and units transferred out |
| Materials | Conversion | Total | ||||
| Ending work in process inventory: | ||||||
| Equivalent units of production (materials: 20,000 units × 60% complete; conversion: 20,000 units × 40% complete) | 12,000 | 8,000 | ||||
| Cost per equivalent unit | $ | 1.21 | $ | 0.51 | ||
| Cost of ending work in process inventory | $ | 14,520 | $ | 4,080 | $ | 18,600 |
| Units completed and transferred out: | ||||||
| Units transferred to the next department | 290,000 | 290,000 | ||||
| Cost per equivalent unit | $ | 1.21 | $ | 0.51 | ||
| Cost of units completed and transferred out | $ | 350,900 | $ | 147,900 | $ | 498,800 |
4.
| Cost of beginning work in process inventory ($59,000 + $23,400) = $82,400 |
| Costs added to production during the period ($306,420 + $128,580) = $435,000 |
