Evergreen Kit Company produces kits for plastic aeroplanes and car models. The company uses process costing to assign costs to its inventory. The company has only one production department. Direct materials are introduced at the beginning of the process, and conversion costs are incurred evenly throughout the manufacturing process. Once each unit is completed, it is transferred to finished goods inventory. The following data are collected for the month of March:

Beginning work in process (WIP) inventory 10,000 units^*

^*Direct material 100% completed and conversion 40% completed

Cost of beginning WIP inventory:

Direct material $8,000

Conversion costs 2,220

Total cost of beginning WIP $10,220

Units completed and transferred out during March 48,000 units

Units started during March 40,000 units

Ending WIP inventory (direct material 100% completed and conversion 50% completed)

Direct material cost incurred during March $44,000

Conversion costs incurred during March 36,000

Required:

Using the weighted average method:

a) Calculate the total equivalent units for direct material and conversion during March (3 marks)

b) Calculate the cost per equivalent unit for direct material and conversion during March (3 marks)

c) Calculate the cost of units completed and transferred out, and the cost of ending WIP inventory (2 marks)

ii) At a recent professional meeting, two controllers discussed product costing problems in their respective companies. Both controllers are familiar with Activity-based costing systems, but neither of their firms utilizes such a system. Controller A reported that part of the problem in his firm results from major differences among product lines with respect to unit volume, utilization of activities, quality assurance requirements established by customers, and product size. Controller B noted that in her company, which manufactures consumer goods, all items undergo the same basic production processes in the same sequence. Both controllers are worried about the potential distortion of product costs under their traditional product costing systems.

Required: Which controller should be more concerned about the potential distortion? Explain. (3 marks)