\"I think we goofed when we hired that new assistant controller,\" said Ruth Sca

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 1,500 units; materials $ 8,765 100% complete ; conversion 60% complete Costs transferred in during the month from the preceding department, 3,000 units Materials cost added during the month Conversion costs incurred during the month Total departmental costs 35,065 14,841 31,230 $ 89,901 Finishing Department costs assigned to: Units completed and transferred to finished goods, 3,900 units at $23.050 per unit 89,901 Work in process inventory, April 30, 600 units; materials 0% complete; conversion 50% complete $ 89,901 Total departmental costs assigned Consists of cost transferred in, $4,310; materials cost, $2,085; and conversion cost, $2,370 "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 $23.050 unit cost that he's come up with for April. Doesn't that seem high to you" said Ms. Scarpino

Explanation / Answer

Solution 1a:

Solution 1b:

Solution 1c and 1d:

Computation of Equivalent unit of Production - Finishing Department Particulars Physical Units Prior Department Cost Material Conversion Unit completed & Transferred out 3900 3900 3900 3900 Closing WIP: 600 Prior deparment cost (100%) 600 Material (0%) 0 Conversion (50%) 300 Equivalent units of production 4500 4500 3900 4200

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