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 Mixing 100 % Units Materials Conversion Work in process inventory, September 1 Work in process inventory, September 30 50 % 60 % 100 8 20 % 10 8 Mixing Materials Conversion $ 15,424 Work in process inventory, September 1 Cost added during September $4 328 912 $ 124,296 $ 201,776 $ 26,595 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, 112 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) Equivalent unit

	Physical unit	% Mixing	EUP-Mixing	% material	EUP-material	% conversion	EUP-Conversion
Unit transferred out	112	100%	112	100%	112	100%	112
Ending work in process	8	100%	8	20%	1.60	10%	0.80
Equivalent unit	120		120		113.60		112.80

2) Cost per equivalent unit

	Mixing	Material	Conversion
Beginning WIP	15424	328	912
Cost added	201776	26595	124296
Total Cost	217200	26923	125208
Equivalent unit	120	113.60	112.80
Cost per equivalent unit	1810	237	1110

3) Cost of ending work in process

	Mixing	material	Conversion	Total
Cost of ending work in process	14480	379	888	15747

4) Cost of unit transferred out

	Mixing	Material	Conversion	Total
Cost of unit transferred out	202720	26544	124320	353584

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	16664
Cost added	352667
Total Cost to be accounted for	369331
Cost accounted as
Cost of unit transferred out	353584
Cost of ending WIP	15747
Total Cost accounted as	369331