Refer to the data for Provost Industries in the preceding case. Assume that the company uses the FIFO method
to account for units and costs.

Required
1. Prepare a production report for the Finishing Department for April.
2. As stated in the case, the company experienced an increase in materials prices during April. Would the effects of this price increase tend to show up more under the weighted-average method or under the FIFO method? Why?

Data From preceding case

‘I think we blundered when we hired that new assistant accountant,’ said Ruth Scarpino, Managing Director of Provost 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.’

‘He’s struggling to learn our system,’ replied Frank Harrop, 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’m concerned about. Look at that £25.71 unit cost that he’s come up with for April. Doesn’t that seem high to you?’ said Ms Scarpino. ‘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 Mr Harrop. ‘I’ll get someone else to redo this report and then we may be able to see what’s going on.’ Provost 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.

Transcribed Image Text:

Finishing Department costs: Work in progress inventory, 1 April, 450 units; 100% complete as to materials; 60% complete as to conversion costs Costs transferred in during the month from the preceding department, 1,950 units Materials cost added during the month (materials are added when processing is 50% complete in the Finishing Department) Conversion costs incurred during the month Total departmental costs Finishing Department costs assigned to: Units completed and transferred to finished goods, 1,800 units at £25.71 per unit 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. £8,208* 17,940 6,210 13,920 £46,278 £46,278 0 £46,278