"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:
materials 100% complete; conversion 60% complete$31,850*
Costs transferred in during the month from the
preceding department, 135,000 units 267,530
Materials cost added during the month 56,500
Conversion costs incurred during the month 242,392
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 0
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. "I'll 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 costing.
required:
Calculate the cost per equivalent unit for transferred in costs only