Question

Finishing Department costs:
Work in process inventory, April 1,250 units; materials 100% complete; conversion 60% complete	$	8,680	*
Costs transferred in during the month from the preceding department, 2,750 units		31,100
Materials cost added during the month		12,866
Conversion costs incurred during the month		26,800
Total departmental costs	$	79,446
Finishing Department costs assigned to:
Units completed and transferred to finished goods, 3,400 units at $23.370 per unit	$	79,446
Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete		0
Total departmental costs assigned	$	79,446

*Consists of cost transferred in, $4,300; materials cost, $2,060; and conversion cost, $2,320.

"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 $23.370 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

Solution 1-a:

Equivalent units of production (EUP) - Weighted Average method
	Units	% Transferred In	EUP-Transferred In	% Material	EUP-Material	% Conversion	EUP- Conversion
Units Completed and transferred out	3400	100%	3400	100%	3400	100%	3400
units of Ending work in process	600	100%	600	0%	0	40%	240
Equivalent units of production			4000		3400		3640

Solution 1-b:

Cost per Equivalent unit:	Transferred In	Materials	Conversion
Cost of Beginning Work in Process	$4,300	$2,060	$2,320
Cost added during the month	$31,100	$12,866	$26,800
Total Costs	$35,400	$14,926	$29,120
/Equivalent units of Production	4000	3400	3640
Cost per Equivalent unit of Production	$8.85	$4.39	$8.00

Solution 1-c:

Cost of ending work in process	EUP	Cost per EUP	Total Cost
Transferred In costs	600	$8.85	$5,310
Materials	0	$4.39	$0
Conversion	240	$8.00	$1,920
Total Ending work in process			$7,230

Solution 1-d:

Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
Transferred In costs	3400	$8.85	$30,090
Materials	3400	$4.39	$14,926
Conversion	3400	$8.00	$27,200
Total transferred out			$72,216