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 700 units; materials 100% complete; conversion 60% complete	$	8,493	*
Costs transferred in during the month from the preceding department, 2,200 units		22,025
Materials cost added during the month		8,345
Conversion costs incurred during the month		18,110
Total departmental costs	$	56,973
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 2,300 units at $24.770 per unit	$	56,973
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	56,973

*Consists of cost transferred in, $4,278; materials cost, $2,005; and conversion cost, $2,210.

"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 $24.770 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

Statement of Equivalent production
Particulars	Direct Materials	%completion	Equivalent mat	Conversion	%completion	Equivalent Conv	Total
Opening WIP	700.00	100%	700.00	700.00	100%	700.00
Units started and completed = 2300 - 700	1,600.00	100%	1,600.00	1,600.00	100%	1,600.00
ending WIP	600.00	0%	-	600.00	40%	240.00
1a) Equivalent Units			2,300.00			2,540.00
Opening WIP Costs			4,278.00			4,215.00	8,493.00
Current Month Costs			30,370.00			18,110.00	48,480.00
Total costs			34,648.00			22,325.00	56,973.00
1-b)Cost per Equivalent units			15.06			8.79	23.85
Ending WIP Units			-			240.00
1-c)Cost of Ending WIP			-			2,109.45	2,109.45
units completed and transferred			2,300.00			2,300.00
1-d) Cost of units completed and transferred			34,648.00			20,215.55	54,863.55