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 600 units; materials 100% complete; conversion 60% complete	$	8,459	*
Costs transferred in during the month from the preceding department, 2,100 units		20,323
Materials cost added during the month		7,497
Conversion costs incurred during the month		16,530
Total departmental costs	$	52,809
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 2,100 units at $25.150 per unit	$	52,809
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	52,809

*Consists of cost transferred in, $4,274; materials cost, $1,995; and conversion cost, $2,190.

"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 $25.150 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

Calculation of equivalent unit
Particulars		Transferred	material	Conversion
Transferred & completed		2100	2100	2100
WIP ending		600	0	240
Equivalent unit		2700	2100	2340
Calculation of equivalent unit
particulars		Transferred	material	Conversion
Beginning WIP		4274	1995	2190
Cost added during the year		20323	7497	16530
Total cost		24597	9492	18720
equivalent unit		2700	2100	2340
Cost per equivalent unit		9.11	4.52	8.00
Cost of ending WIP
particulars		Transferred	material	Conversion
Equivalent unit of production		600	0	240
Equivalent unit of production		9.11	4.52	8
Cost of ending WIP		5466	0	1920
Cost of unit transferred out
particulars		Transferred	material	Conversion
Transfer to next department		2100	2100	2100
Cost per equivalent unit		9.11	4.52	8.00
Cost		19131	9492	16800