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 1,400 units; materials 100% complete; conversion 60% complete	$	8,731	*
Costs transferred in during the month from the preceding department, 2,900 units		33,491
Materials cost added during the month		14,057
Conversion costs incurred during the month		29,650
Total departmental costs	$	85,929
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 3,700 units at $23.220 per unit	$	85,929
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 50% complete		0
Total departmental costs assigned	$	85,929

*Consists of cost transferred in, $4,306; materials cost, $2,075; and conversion cost, $2,350.

"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 $23.220 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

• All workings form part of the answer
• Requirement 1 [a]

Statement of Equivalent Units
		Cost Transferred		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	3,700	100%	3,700.0	100%	3,700.0	100%	3,700.0
Closing WIP	600	100%	600.0	0%	-	50%	300.0
Total	4,300	Total	4,300.0	Total	3,700.0	Total	4,000.0

• 1[b]

Cost per Equivalent Units
COST	Cost Transferred	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$               4,306.00	$             2,075.00	$                2,350.00	$               8,731.00
Cost incurred during period	$             33,491.00	$          14,057.00	$              29,650.00	$            77,198.00
Total Cost to be accounted for	$             37,797.00	$          16,132.00	$              32,000.00	$            85,929.00
Total Equivalent Units	4,300	3,700	4,000
Cost per Equivalent Units	$                   8.7900	$                4.3600	$                    8.0000	$                21.1500

• Working for 1[c] and 1[d]

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Cost Transferred	$                       8.79	600	$                5,274.00	3,700	$            32,523.00
Material	$                       4.36	-	$                             -	3,700	$            16,132.00
Conversion Cost	$                       8.00	300	$                2,400.00	3,700	$            29,600.00
TOTAL	$             85,929.00	TOTAL	$                7,674.00	TOTAL	$            78,255.00

• 1[c] Cost assigned to ending inventory = $ 7674
• 1[d] Cost assigned to units completed and transferred = $ 78255