Charleston Can Inc. has 1,000 units in process in Forming at the beginning of the month with a transferred cost of $21,200 from Blanking. During the month, 5,000 units with a total cost of $100,000 are received from Blanking; 4,000 units are finished and transferred to Finishing; and 2,000 units are in process in Forming at the end of the month, one-half completed.
Required:
1. Compute the adjusted unit cost from the prior department in the Forming Department.
2. Based on the amount of the cost per unit of the inventory transferred compared to the cost per unit of the beginning inventory, why might management want to do a cost study of the Blanking Department?