Just look at this report that he prepared for last month for the Finishing Department. I can’t understand it.
“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 1,100 units; materials 100% complete; conversion 60% complete | $ | 8,629 | * |
| Costs transferred in during the month from the preceding department, 2,600 units | 28,673 | ||
| Materials cost added during the month | 11,657 | ||
| Conversion costs incurred during the month | 24,430 | ||
| Total departmental costs | $ | 73,389 | |
| Finishing Department costs assigned to: | |||
| Units completed and transferred to finished goods, 3,100 units at $23.670 per unit | $ | 73,389 | |
| Work in process inventory, April 30, 600 units; materials 0% complete; conversion 40% complete | 0 | ||
| Total departmental costs assigned | $ | 73,389 | |
*Consists of cost transferred in, $4,294; materials cost, $2,045; and conversion cost, $2,290.
“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 $23.670 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.