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 1,100 units; materials 100% complete; conversion 60% complete	$	8,629	*
Costs transferred in during the month from the preceding department, 2,600 units		28,673
Materials cost added during the month		11,657
Conversion costs incurred during the month		24,430
Total departmental costs	$	73,389
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 3,100 units at $23.670 per unit	$	73,389
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	73,389

*Consists of cost transferred in, $4,294; materials cost, $2,045; and conversion cost, $2,290.

"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 $23.670 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		Transferred in	Direct Materials	Conversion
Beginning work in process	1100
Started during the month	2600
Total units	3700
Units accounted for
Transferred out	3100	3100	3100	3100
Ending WIP	600	600	0	240
Total units accounted for	3700	3700	3100	3340
COSTS	Transferred in	Direct Materials	Conversion	Total costs
Costs to account for
Beginning work in process	4294	2045	2290	8629
Costs added during the period	28673	11657	24430	64760
Total costs to account for	32967	13702	26720	73389
Divided by Total EUP	3700	3100	3340
Cost per equivalent unit	8.91	4.42	8.00	21.33
Costs accounted for			0
Completed and transferred out	27621	13702	24800	66123
Ending WIP	5346	0	1920	7266
Total costs accounted for	32967	13702	26720	73389