Preparing a cost of production report; comparing unit costs. April 19X3 is the first month of operations for the Denmead Processing Company. In the Mixing Department (the second department), 3,960 units were transferred in from the Grinding Department during April. These units were transferred in at a total cost of $233,640 ($59 each). Additional costs incurred in the Mixing Department during April were: materials, $47,520; labor, $93,330; and overhead, $43,474. Of the 3,960 units, 3,690 were completed and transferred out to finished goods. The remaining 270 were still in process on April 30. All materials had been added, but only 25 percent of the labor and 25 percent of the overhead had been added.

Instructions 1. Prepare a cost of production report for the Mixing Department for the month of April.

2. In the month of May, the costs per equivalent unit in the Mixing Department were as follows: materials, $12.01; labor, $21.16; and overhead, $11.60. If you were a part of the management at the Denmead Processing Company, what steps would you take after comparing the costs per equivalent unit for April and May?

Suggest possible reasons for the differences.