“He’s struggling to learn our system,” replied Frank Harrop, the operations mana
ID: 2487637 • Letter: #
Question
“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 may be able to see what’s going on.”
“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 understamd it."
Finishing Department Costs: Work in process inventory, April1, 450 units; materials 100% completed; 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 department costs..............................................$46,278 Finishing Departments assigned to: Units completed and transferred to ffinished 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 department costs assigned .................................$46,278 * Consists of costs transferred in, $4,068; materials cost, $1,980; and conversion cost, $2,160 Provost Industries manufactures a ceramic product that goes through two processing departments—Molding and Finishing.
My assignemt is to write 3 pages of this case explanimg the 2 required underneathe this. My question beside the ones under this what would be a way i can write a 3 page paper explainig all the key poimts of this case? what are all the key points i should cover in a paper for a sucessful paper?
1.Prepare a report for the Finishing Department showing how much cost should have been assigned to the units completed and transferred to finished goods, and how much cost should have been assigned to ending work in process inventory in the Finishing Department.
2.The company uses the weighted-average method in its process costing. How do you explain to the president why the unit cost on the new assistant controller’s report is so high?
Explanation / Answer
Answer:
Cost per Equivalent Unit:
Answer:2
The unit cost computed above is $21.72 (= $9.17 + $4.55 + $8.00) versus $25.71 on the original report for the units completed and transferred to finished goods. The unit cost on the original report is high because none of the cost incurred during the month was assigned to the units in the ending work in process inventory.
Transferred in costs Materials Conversion Transferred to finished goods 1800 1800 1800 Ending work in Process: Transferred in costs: (600 units*100% complete) 600 Materials: 600 units*0% complete 0 Conversion:600 units*35% complete 210 Equivalent units of Production 2400 1800 2010Related Questions
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