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 950 units; materials 100% complete; conversion 60% complete $ 8,578 * Costs transferred in during the month from the preceding department, 2,450 units 26,210 Materials cost added during the month 10,430 Conversion costs incurred during the month 22,060 Total departmental costs $ 67,278 Finishing Department costs assigned to: Units completed and transferred to finished goods, 2,800 units at $24.030 per unit $ 67,278 Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete 0 Total departmental costs assigned $ 67,278 *Consists of cost transferred in, $4,288; materials cost, $2,030; and conversion cost, $2,260. "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 $24.030 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				950.00
Add: Units Started in Process				2,450.00
Total Units to account for:				3,400.00
UNITS TO BE ACCOUNTED FOR:
Units started and completed				2,800.00
Ending Work in Process				600.00
Total Units to be accounted for:				3,400.00
Equivalent Units:
			Transferred in Cost		Material Cost		Conversion Cost
			% Completion	Units	% Completion	Units	% Completion	Units
Units started annd completed			100%	2,800.00	100%	2,800.00	100%	2,800.00
Ending Work in Process			100%	600.00	0%	0.00	40%	240.00
Total Equivalent units				3,400.00		2,800.00		3,040.00
TOTAL COST TO ACCOUNT FOR:
			Transferred-in		Material		Conversion
Beginning work in Process			4,288		2030		2,260
Cost Added during May			26,210		10,430		22,060
Total Cost to account for:			30,498		12,460		24,320
Total Cost to account for:							67,278
COST PER EQUIVALENT UNIT:
			Transferred-in		Material		Conversion
Cost added during the period			30,498		12,460		24,320
Equivalent Units			3,400.00		2,800.00		3,040.00
Cost per Equivalent unit			8.97		4.45		8.00
TOTAL COST ACCOUNTED FOR:
Units started and Completed and Transferred out (2800 units)
			Equivalent unit	Cost per EU	Total Cost
Transferred-in cost			2,800	8.97	25116
Material cost			2,800	4.45	12460
Conversion Cost			2,800	8	22400
Total Cost of Units completed and transferred out:					59976
Ending Work in Process (600 units)
			Equivalent unit		Total Cost
Transferred-in cost			600.00	8.97	5382
Material cost			0.00	4.45	0
Conversion Cost			240.00	8	1920
Total cost of Ending Work in process:					7,302
Total Cost accounted for:					67,278