Preparing a cost of production report; comparing unit costs.

The Heller Company produces a single product, involving three processing departments.

All materials are added at the beginning of production. On May 1, 19X2, there were 20,000 liters of the product in process in the first department. During the month of May, 195,000 liters were placed into production and 170,000 liters were transferred out to the next department. The ending work in process inventory is one-half completed. The beginning inventory costs were: materials, $80,000; labor,

$36,000; and overhead, $18,000. During May, additional costs were: materials,

$725,000; labor, $332,600; and overhead, $164,400.

Instructions 1. Prepare a cost of production report for the first department for the month of May.
2. In the month of April 19X2, the costs per equivalent unit in the first department were as follows: materials, $3.81; labor, $1.86; and overhead, $.90. If you were part of management at the Heller Company, what steps would you take after comparing the costs per equivalent unit for May and April? Suggest possible reasons for the differences.