\"I think we goofed when we hired that new assistant controller,\" said Ruth Sca
ID: 2397658 • Letter: #
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."
*Consists of cost transferred in, $4,302; materials cost, $2,065; and conversion cost, $2,330.
"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 $23.270 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.)
Finishing Department costs: Work in process inventory, April 1,300 units; materials 100% complete; conversion 60% complete $ 8,697 * Costs transferred in during the month from thepreceding department, 2,800 units 31,901 Materials cost added during the month 13,265 Conversion costs incurred during the month 27,590 Total departmental costs $ 81,453 Finishing Department costs assigned to: Units completed and transferred to finished goods,
3,500 units at $23.270 per unit $ 81,453 Work in process inventory, April 30, 600 units;
materials 0% complete; conversion 40% complete 0 Total departmental costs assigned $ 81,453
*Consists of cost transferred in, $4,302; materials cost, $2,065; and conversion cost, $2,330.
"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 $23.270 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.)
Explanation / Answer
UNITS TO ACCOUNT FOR: Beginning Work in Process units 1,300.00 Add: Units Started in Process 2,800.00 Total Units to account for: 4,100.00 UNITS TO BE ACCOUNTED FOR: Units started and completed 3,500.00 Ending Work in Process 600.00 Total Units to be accounted for: 4,100.00 Equivalent Units: Transferred in Cost Material Cost Conversion Cost % Completion Units % Completion Units % Completion Units Units started annd completed 100% 3,500.00 100% 3,500.00 100% 3,500.00 Ending Work in Process 100% 600.00 0% 0.00 40% 240.00 Total Equivalent units 4,100.00 3,500.00 3,740.00 TOTAL COST TO ACCOUNT FOR: Transferred-in Material Conversion Beginning work in Process 4,302 2065 2,330 Cost Added during May 31,901 13,265 27,590 Total Cost to account for: 36,203 15,330 29,920 Total Cost to account for: 81,453 COST PER EQUIVALENT UNIT: Transferred-in Material Conversion Cost added during the period 36,203 15,330 29,920 Equivalent Units 4,100.00 3,500.00 3,740.00 Cost per Equivalent unit 8.83 4.38 8.00 TOTAL COST ACCOUNTED FOR: Units started and Completed and Transferred out (3500 units) Equivalent unit Cost per EU Total Cost Transferred-in cost 3,500 8.83 30905 Material cost 3,500 4.38 15330 Conversion Cost 3,500 8 28000 Total Cost of Units completed and transferred out: 74235 Ending Work in Process (600 units) Equivalent unit Total Cost Transferred-in cost 600.00 8.83 5298 Material cost 0.00 4.38 0 Conversion Cost 240.00 8 1920 Total cost of Ending Work in process: 7,218 Total Cost accounted for: 81,453 Req 1a Transferred in Material Conversion Equivalent units 4100 3500 3740 Req 1-b: Transferred in Material Conversion Cost pr equivalennt unit 8.83 4.38 8 Req -c: Cost assigned to ending WIP: $ 7218 Req d: Cost assigned to Transferred units: $ 74235
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