Question

"I think we goofed when we hired that new assistant controller," said Ruth Scarpino, president of Provost Industries. "Just look at this report that he prepared for last month for the Finishing Department. I can’t understand it."

Finishing Department costs:
Work in process inventory, April 1,150 units; materials 100% complete; conversion 60% complete	$	8,646	*
Costs transferred in during the month from the preceding department, 2,650 units		29,486
Materials cost added during the month		12,062
Conversion costs incurred during the month		25,700
Total departmental costs	$	75,894
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 3,200 units at $23.720 per unit	$	75,894
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 50% complete		0
Total departmental costs assigned	$	75,894

*Consists of cost transferred in, $4,296; materials cost, $2,050; and conversion cost, $2,300.

"He's struggling to learn our system," replied Frank Harrop, the operations manager. "The problem is that he's been away from process costing for a long time, and it's coming back slowly."

"It's not just the format of his report that I'm concerned about. Look at that $23.720 unit cost that he's come up with for April. Doesn't that seem high to you?" said Ms. Scarpino.

"Yes, it does seem high; but on the other hand, I know we had an increase in materials prices during April, and that may be the explanation," replied Mr. Harrop. "I’ll get someone else to redo this report and then we can see what’s going on."

Provost Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing. The company uses the weighted-average method in its process costing.

Required:

1-a. Calculate the equivalent units of production.

1-b. Calculate the cost per equivalent unit. (Round your answers to 2 decimal places.)

1-c. How much cost should have been assigned to the ending work in process inventory? (Round your intermediate calculations to 2 decimal places.)

1-d. How much cost should have been assigned to the units completed and transferred to finished goods? (Round your intermediate calculations to 2 decimal places.)

Answer 1

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Provost Industries
Finishing Department
Cost of Production Report- Weighted Average
		Equivalent Units
	Whole Units	Transferred in costs	Materials	Conversion Costs	Total Costs
Flow of production of units:
Units charged to production:
Opening Inventory in process	1,150.00
Transferred in from Molding in last month	2,650.00
Total units to be accounted for	3,800.00
Units accounted for
Units completed and transferred out
From beginning Inventory	1,150.00	1,150.00	1,150.00	1,150.00
Started and completed currently	2,050.00	2,050.00	2,050.00	2,050.00
Units ending in WIP Inventory	600.00	600.00	-	300.00		This is Whole units* % pending to complete.
The equivalent units of production	3,800.00	3,800.00	3,200.00	3,500.00		Answer 1 a
Costs to be accounted for
Costs in beginning WIP Inventory		4,296.00	2,050.00	2,300.00	8,646.00
Current period costs		29,486.00	12,062.00	25,700.00	67,248.00
Total costs to be accounted for		33,782.00	14,112.00	28,000.00	75,894.00
Costs per equivalent unit						Answer 1 b
Transferred in costs		8.89			8.89
Materials			4.41		4.41
Conversion Costs				8.00	8.00
Costs accounted for
Costs assigned to units transferred out
Costs assigned to beginning WIP inventory
Transferred in costs		10,223.50			10,223.50
Materials			5,071.50		5,071.50
Conversion Costs				9,200.00	9,200.00
Costs assigned to beginning WIP inventory		10,223.50	5,071.50	9,200.00	24,495.00
Costs assigned to Started and completed in same month
Transferred in costs		18,224.50			18,224.50
Materials			9,040.50		9,040.50
Conversion Costs				16,400.00	16,400.00
Costs assigned to Started and completed in same month		18,224.50	9,040.50	16,400.00	43,665.00
Total Costs of units transferred out		28,448.00	14,112.00	25,600.00	68,160.00	Answer 1 d
Costs assigned to ending WIP inventory
Transferred in costs		5,334.00			5,334.00
Materials			-		-
Conversion Costs				2,400.00	2,400.00
Total ending WIP inventory		5,334.00	-	2,400.00	7,734.00	Answer 1 c
Total Costs accounted for		33,782.00	14,112.00	28,000.00	75,894.00

Note: in Weighted Average method total cost (production+ Opening WIP) is allocated among equivalent units.

Started and completed in last month:
Units completed in last month	3,200.00
Less: Opening Inventory	1,150.00
Started and completed in last month:	2,050.00