Talloor industries: Process Costing Case

"I think we blundered when we hired that new assistant accountant," said Felix, Managing Director

of Talloor Industries. "Just look at this production report that he prepared last month for the

Finishing Department. I can't make head nor tail of it$."$

Finishing Department costs:

Work in progress inventory, $1$ April, $450$ units:

$100\%$ complete as to materials; $60\%$ complete as to conversion costs

$8,208$

Costs transferred in during the month from the preceding department, $1,950$ units

$17,940$

Materials cost added during the month $($materials are added when processing is $50\%$ complete in the

Finishing Department$)$

$6,210$

Conversion costs incurred during the month

$13,920$

Total departmental costs

Finishing Department costs assigned to:

Units completed and transferred to finished goods, $1,800$ units at $25\mathrm{.}71$ per unit

$46,278$

Work in progress inventory, $30$ April, $600$ units; $0\%$ complete as to materials; $35\%$ complete as to

processing

Total departmental costs assigned

$*$Consists of: cost transferred in$,4,068$; materials cost, $1,980$; and conversion cost, $2,160.$

"He's struggling to learn our system," replied Lisa, 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$\text{'}$m concerned about. Look at that $25\mathrm{.}71$ unit cost he's

come up with for April. Doesn't that seem high to you?" said Felix.

"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 Lisa. "I'll get someone else to redo his report and

then we may be able to see what's going on$."$

Talloor industries manufactures a ceramic product that goes through two processing departments $-$

Moulding and Finishing. The company uses the weighted$-$average method to account for units and

costs.

Required

$1$ Prepare a revised production report for the finishing department.

$2$ Explain to the Managing Director why the unit cost on the new assistant accountant's"I thing we blundered when we hired that new assistant accountant," said Felix, Managing Director of Talloor Industries. "Just look at this production report that he prepared last month for the Finishing Department. I can't make head nor tail of it$."$

Finishing Department costs:

Work in progress inventory, $1$ april, $450$ units;

$100\%$ complete as to materials:$60\%$ complete as to conversion costs $$8\mathrm{.}208*$

Costs tranferred in during the month from the preceeding departent, $1\mathrm{.}950$ units $$17\mathrm{.}940$

Materials cost added during the month $($materials are added when processing is $50\%$ complete in the Finishing Department$)$ $$6\mathrm{.}210$

Conversion costs incurred during the month $$13\mathrm{.}920$

Total department costs $$46\mathrm{.}278$

Finishing department costs assigned to:

Units completed and transferred to finished goods, $1\mathrm{.}800$ units at $$25,71$ per unit $$46\mathrm{.}278$

Work in progress inventory, $30$ april, $600$ units; $0\%$ complete as to materials; $35\%$ as to processing $$0$

Total departamental costs assigned $$46\mathrm{.}278$

$*$Consists of: cost transferred in$,$ $$4\mathrm{.}068$; materials cost, $$1\mathrm{.}980$; and conversion cost, $ $2\mathrm{.}160.$

$"$He is struggling to learn our system," replied Lisa, the operations manager. "The problem is that he is been away from process costin for a long time, and it's coming back slowly."

$"$It is not just the format of his report that I$\text{'}$m concerned about. Look at that $$25,71$ unit cost he's come up with for April. Doesn't that seem high to you?" Said Felix.

"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 Lisa. "I'll get someone else to redo his report and then we may be able to see what is going on$."$

Talloor Industries manufactures a ceramic product that goes through two processing departments $-$ Moduling and Finishing. The company uses the weighted$-$average method to account for units and costs.

REQUIRED

$1.$ Prepare a revised production report for the finishing department. Show the steps

$2.$ Explain to the Managing Director why the unit cost on the new assistant accountant's report is so high. Show the steps.