\"I think we goofed when we hired that new assistant controller,\" said Ruth Sca
ID: 2477065 • 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 Finishing Department costs Work in process inventory, April 1, 9,000 units $31,850* materials 100% complete: conversion 60% complete Costs transferred in during the month from the preceding department, 135,000 units Materials cost added during the month Conversio 267,530 56,500 242,392 n costs incurred during the month Total departmental costs $598,272 Finishing Department costs assigned to Units completed and transferred to finished goods 120,000 units at $4.986 per unit $598,272 Work in process inventory, April 30, 24,000 units materials 0% complete conversion 40% complete Total departmental costs assigned $598,272 *Consists of cost transferred in, $8,950; materials cost, $3,500; and conversion costs, $19,400 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 $4.986 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. "T'l get someone else to redo this report and then we may be able to 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 costingExplanation / Answer
Answer: 1 a)
Equivalent units = Units transferred + units in ending WIP * % of completion using the same
Equivalent units for transferred in = 120000 + 24000 = 144000 units
Equivalent units for material = 120000 + 24000 * 0% = 120000 units
Equivalent units for conversion = 120000 + 24000*40% = 120000+9600 = 129600 units
Calculation of Cost per equivalent unit:
Transferred in = (8950+267530) / 144000 = $1.92 per unit
Material= (3500+56500)/120000 = $0.5 per unit
Conversion = (19400+242392)/129600 = $2.02 per unit
Answer: 1 b)
Calculation of cost of ending WIP:
Transferred in = 24000*$1.92 = $46080
Material = 0*$0.5 = $0
Conversion = 9600*$2.02 = $19392
Total = $46080+$0+$19392= $65472
Answer:1 c)
Calculation of costs of units transferred and completed:
Transferred in = 120000*$1.92 =$230400
Material = 120000*$0.5 = $60000
Conversion = 120000*$2.02 = $242400
Total = $230400+$60000+$242400= $532800
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