Question

Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed with spices. The spiced meat mixture is then transferred to the Casing and Curing Department, where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for September for the Casing and Curing Department follow:

		Percent Completed
	Units	Mixing		Materials		Conversion
Work in process inventory, September 1	6	100	%	60	%	50	%
Work in process inventory, September 30	6	100	%	20	%	10	%

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	13,404	$	30	$	2,964
Cost added during September	$	201,726	$	14,592	$	136,612

Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department. The spiced meat mixture is processed in the Casing and Curing Department in batches; each unit in the above table is a batch and one batch of spiced meat mixture produces a set amount of sausages that are passed on to the Packaging Department. During September, 95 batches (i.e., units) were completed and transferred to the Packaging Department.

Required:

1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September.

2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September.

3. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total for September.

4. Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total for September.

5. Prepare a cost reconciliation report for the Casing and Curing Department for September.

Answer 1

1.

Answer:

	Mixing	Materials	Conversion
Equivalent units of production	101	96.2	95.6

Calculation:

Weighted-Average Method:

Computation of equivalent units of production:	Mixing	Materials	Conversion
Units transferred to the next department	95.0	95.0	95.0
Equivalent units in ending work in process inventory
Mixing: 6 unit × 100% complete	6.0
Materials: 6 unit × 20% complete		1.2
Conversion: 6 unit × 10% complete			0.6
Equivalent units of production	101.0	96.2	95.6

2.

Answer:

	Mixing	Materials	Conversion
Cost per equivalent unit	2,130	152	1,460

Calculation:

Costs per equivalent unit of production:
	Mixing	Materials	Conversion
Cost of beginning work in process inventory	13,404	30	2,964
Cost added during the period	201,726	14,592	136,612
Total cost (a)	215,130	14,622	139,576
Equivalent units of production (b)	101.0	96.2	95.6
Cost per equivalent unit (a) ÷ (b)	2,130	152	1,460

3.

Answer:

	Mixing	Materials	Conversion	Total
Cost of ending work in process inventory	12,780	182	876	13,838

4.

Answer:

	Mixing	Materials	Conversion	Total
Cost of units transferred out	202,350	14,440	138,700	355,490

Calculation:

Costs of ending work in process inventory and units transferred out:
	Mixing	Materials	Conversion
Ending work in process inventory:
Equivalent units	6	1.2	0.6
Cost per equivalent unit	2,130	152	1,460
Cost of ending work in process inventory	12,780	182	876
Units completed and transferred out:
Units transferred to the next department	95	95	95
Cost per equivalent unit	2,130	152	1,460
Cost of units transferred out	202,350	14,440	138,700

5.

Answer:

Casing and Curing Department
Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process inventory	16,398
Costs added to production during the period	352,930
Total cost to be accounted for	369,328
Costs accounted for as follows:
Cost of ending work in process inventory	13,838
Cost of units completed and transferred out	355,490
Total cost accounted for	369,328

Calculation:

Cost of beginning work in process inventory Calculation:
	13,404
	30
	2,964
Cost of beginning work in process inventory=	16,398
Cost added to production during the period Calculation:
	201,726
	14,592
	136,612
Cost added to production during the period=	352,930