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 1,300 units; materials 100% complete; conversion 60% complete	$	8,697	*
Costs transferred in during the month from the preceding department, 2,800 units		31,901
Materials cost added during the month		13,265
Conversion costs incurred during the month		27,590
Total departmental costs	$	81,453
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 3,500 units at $23.270 per unit	$	81,453
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	81,453
*Consists of cost transferred in, $4,302; materials cost, $2,065; and conversion cost, $2,330. "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 $23.270 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

UNITS TO ACCOUNT FOR:
Beginning Work in Process units				1,300.00
Add: Units Started in Process				2,800.00
Total Units to account for:				4,100.00
UNITS TO BE ACCOUNTED FOR:
Units started and completed				3,500.00
Ending Work in Process				600.00
Total Units to be accounted for:				4,100.00
Equivalent Units:
			Transferred in Cost		Material Cost		Conversion Cost
			% Completion	Units	% Completion	Units	% Completion	Units
Units started annd completed			100%	3,500.00	100%	3,500.00	100%	3,500.00
Ending Work in Process			100%	600.00	0%	0.00	40%	240.00
Total Equivalent units				4,100.00		3,500.00		3,740.00
TOTAL COST TO ACCOUNT FOR:
			Transferred-in		Material		Conversion
Beginning work in Process			4,302		2065		2,330
Cost Added during May			31,901		13,265		27,590
Total Cost to account for:			36,203		15,330		29,920
Total Cost to account for:							81,453
COST PER EQUIVALENT UNIT:
			Transferred-in		Material		Conversion
Cost added during the period			36,203		15,330		29,920
Equivalent Units			4,100.00		3,500.00		3,740.00
Cost per Equivalent unit			8.83		4.38		8.00
TOTAL COST ACCOUNTED FOR:
Units started and Completed and Transferred out (3500 units)
			Equivalent unit	Cost per EU	Total Cost
Transferred-in cost			3,500	8.83	30905
Material cost			3,500	4.38	15330
Conversion Cost			3,500	8	28000
Total Cost of Units completed and transferred out:					74235
Ending Work in Process (600 units)
			Equivalent unit		Total Cost
Transferred-in cost			600.00	8.83	5298
Material cost			0.00	4.38	0
Conversion Cost			240.00	8	1920
Total cost of Ending Work in process:					7,218
Total Cost accounted for:					81,453
Req 1a			Transferred in		Material	Conversion
Equivalent units			4100		3500	3740
Req 1-b:
			Transferred in		Material	Conversion
Cost pr equivalennt unit			8.83		4.38	8
Req -c:
Cost assigned to ending WIP: $ 7218
Req d:
Cost assigned to Transferred units: $ 74235