Process Costing: Equivalent Units and Cost Reconciliation

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1. Equivalent Units Calculation

Processing DeptMaterialsConversion
Units completed and transferredGiven units completed/transferredGiven units completed/transferred
Ending inventory WIPUnits ending WIP × Material %N/A
Ending inventory WIPN/AUnits ending WIP × Conversion %
Equivalent units of productionSumSum

2. Cost per Equivalent Unit

Processing DeptMaterialsConversion
Cost of beginning WIP inventoryCost beginning WIP materialsCost beginning WIP conversion
Cost added during periodCost added during month materialsCost added during month conversion
Total cost (a)Sum of two previousSum of two previous
Equivalent units of production (b)See last row of section 1See last row of section 1
Cost per equivalent unit (a/b)Division of two previousDivision of two previous

3. Cost-Weighted Average Method

Processing DeptMaterialsConversion
Equiv. units of production end WIPSee section 1, row 2See section 1, row 3
Cost per equivalent unitSee section 2, last rowSee section 2, last row
Cost ending WIPMultiply two previousMultiply two previous
Units completed and transferred outSee section 1, row 1See section 1, row 1
Cost per equivalent unitSee section 2, last rowSee section 2, last row
Cost transferred outMultiply two previousMultiply two previous

Note: Use a 4th column for totals and sum costs in parallel for WIP and transferred out costs.

4. Cost Reconciliation Report

Processing DepartmentTotal
Cost to be accounted forN/A
Cost of beginning WIPTotal cost in beginning WIP (given)
Cost added during monthTotal cost added during month
Total cost to be accounted forSum of two previous
Cost accounted forN/A
Cost of ending WIPSee section 3 (total cost ending WIP)
Cost of units transferred during monthSee section 3 (total cost transferred out)
Total cost accounted forSum of two previous
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cost per equivalent unit WIP inventory cost of goods manufactured cost reconciliation weighted average method manufacturing accounting equivalent units cost accounting production costs cost allocation conversion costs accounting formulas inventory valuation process costing managerial accounting