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 1,700 units; materials 100% complete; conversion 60% complete	$	8,833	*
Costs transferred in during the month from the preceding department, 3,200 units		38,165
Materials cost added during the month		16,385
Conversion costs incurred during the month		33,910
Total departmental costs	$	97,293
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 4,300 units at $22.630 per unit	$	97,293
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	97,293

*Consists of cost transferred in, $4,318; materials cost, $2,105; and conversion cost, $2,410.

"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 $22.630 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

1a
	Transferred In costs	Materials	Conversion
Units completed and transferred out	4300	4300	4300
Work in process, ending	600	0	300
Equivalent units of production	4900	4300	4600
1b
	Transferred In costs	Materials	Conversion
Work in process, April 1	4,318	2,105	2,410
Cost added during month	38,165	16,385	33,910
Total costs	42,483	18,490	36,320
Divide by Equivalent units of production	4900	4300	4600
Cost per Equivalent unit	8.67	4.30	7.90
1c
	Transferred In costs	Materials	Conversion	Total
Work in process, ending units	600	0	300
X Cost per Equivalent unit	8.67	4.30	7.90
Cost of ending work in process inventory	5202	0	2370	7572
1d
	Transferred In costs	Materials	Conversion	Total
Units completed and transferred out	4300	4300	4300
X Cost per Equivalent unit	8.67	4.30	7.90
Cost of Units completed and transferred out	37281	18490	33970	89741

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