*Consists of cost transferred in, $4,300; materials cost, $2,060; and conversion
ID: 2522718 • Letter: #
Question
*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.)
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 thepreceding 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
Explanation / Answer
1.a To calculate the equivalent units of production and to various parts of the question we have to prepare this table
Opening inventory = 1250 units
Units transferred from other department = 2750
Total units completed and transferred to finished goods = 3400
Therfore the units which were introduced and got completed and transferred to finished goods = 3400 - 1250 = 2150 units
CLosing WIP = 600 units
Statement of Equivalent units
Particluars Material Conversion
Total Units % completed units % completed units
Opening 1250 0 0 40 500
Started and
completed 2150 100 2150 100 2150
Closing 600 0 0 40 240
Total 4000 2150 2890
Material costs = 12,866
Number of units 2150
Cost per equivalent units= 12,866 / 2150 = $5.99
Conversion costs = 26,800
Conversion units = 2890
Conversion equivalent units costs = 26800 / 2890 = $9.27
Closing work in progress had 600 units which are completed 40 % = 240 units
Cost of completing 240 units = 240 x $9.27 = $2,224.8
Cost of transfer = 31,100 for 2750 units
therefore the cost per unit = 31,100 / 2750 = $11.31
Now the cost of inventory completed and transferred = Cost of Units completed in this year + Cost of opening inventory
Cost of opening inventory = opening balance + cost incurred in the current period = 8,680 + (500 x 9.27) = $13,315
Cost of units started and completed = 2150 x (material + conversion + transfer costs)
= 2150 (5.99 + 9.27 + 11.31) = $57,125.5
Total Cost = $57,125.5 + $13,315 = $70440.5
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