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, 450 units; materials 100% complete; conversion 60% complete $ 8,208 * Costs transferred in during the month from the preceding department, 1,950 units 17,940 Materials cost added during the month 6,210 Conversion costs incurred during the month 13,920 Total departmental costs $ 46,278 Finishing Department costs assigned to: Units completed and transferred to finished goods, 1,800 units at $25.71 per unit $ 46,278 Work in process inventory, April 30, 600 units; materials 0% complete; conversion 35% complete 0 Total departmental costs assigned $ 46,278 *

Consists of cost transferred in, $4,068; materials cost, $1,980; and conversion cost, $2,160.

"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 $25.71 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

Answer with working notes is given below

Unit Reconciliation: Units to account for: Beginning WIP Inventory Units transferred in Total Units To Account for 450 1,950 2,400 1-a EUP % | EUP Materials Conversion Conversion Equivalent Units of Production - Weighted average method Total Units To Account for % EUP Units Transferred | Transferred In in Units Materials Units Completed during Period: Units completed and transferred to finished goods 1,800 100% 1,800 100% Units in Ending WIP Inventory 600 100% 600 0% 2,400 2,400 Cost per equivalent unit of production Transferred in Cost from Beginning WIP Inventory $4,068 Current Period Costs $17,940 Total cost Costs $22,008 Costs Equivalent units of production EUP 2,400 EUP Cost per equivalent unit of production (rounded to 2 decimal places) $9.17 1,800 100% 35% 1,800 Materials $1,980 $6,210 $8,190 Costs 1,800 EUP $4.55 1,800 210 2,010 Conversion $2,160 $13,920 $16,080 A 2,010 B $8.00 A/B 1- EUP Cost per EUP Total Cost 1,800 1,800 1,800 $9.17 $4.55 $8.00 $16,506 $8,190 $14,400 $39,096 Total Cost accounted for : 1-d Cost of units transferred out to Finished Goods Transferred in Cost Direct Material Conversion Total cost transferred out 1- Costs of ending work in process Transferred in Cost Direct Material Conversion Total cost of ending Work in process Total costs accounted for EUP 600 Cost per EUP $9.17 $4.55 $8.00 Total Cost $5,502 $0 $1,680 210 $7,182 $46,278