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 1,250 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

Weighted average cost
Beggining units	1250	Transferred out	3,400
Started intro production	2750	Ending units	600
	4000		4000
Equivalent units	Material	Conversion	Transferred in
Units transferred                      A	3400	3400	3,400
Ending Units	600	600	600
Completion	100%	40%	100%
B	600	240	600
Total units	4000	3640	4000
Particulars	Material	Conversion	Transferred in	Total
As at beginning	2060	2320	4300	8680
Added during the month	12866	26800	31100	70766
Cost to be accounted for	14926	29120	35400	79446
Total eqivalent units	4000	3640	4000
Cost per equivalent unit	3.73	8.00	8.85	20.58
Cost per equivalent unit = Cost to be accounted for / Total equivalent units

	Cost of ending work in progress
	Particulars	Material	Conversion	Transferred in
	Ending units	600	600	600
	Cost per equivalent units	3.73	8.00	8.85
	Completion	100%	40.0%	100%
	Total cost	2238.90	1920	5310
	Total cost	9469
	Cost of goods transferred
	Particulars	Material	Conversion	Transferred in
	Number of units	3400	3400	3400
	Cost per equivalent units	3.73	8.00	8.85
	Total amount	12687.10	27200	30090
	Total	69977
Add	Work in proress ending
	Material	2238.90
	Labor	1920
	Overheads	5310	9469
	Total cost accounted for		79446