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	2	100	%	60	%	50	%
Work in process inventory, September 30	2	100	%	20	%	10	%

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	4,624	$	106	$	628
Cost added during September	$	263,996	$	21,028	$	153,140

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, 119 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.

Computation of equivalent units of production

	Mixing	Materials	Conversion
Units transferred to the next department	119	119	119
Equivalent units in ending WIP inventory
Mixing 2 units X 100% complete	2
Materials 2 X 20%		0.4
Conversion    2X 10%			0.2
	121	119.4	119.2

2. Costs per equivalent units of production

	Mixing	Materials	Conversion
Cost of beginning WIP inventory	4624	106	628
Cost added during the period	263996	21028	153140
Total costs (a)	268620	21134	153768
Equivalent units of production (b)	121	119.4	119.2
Cost per equivalent unit (a/b)	2220	177.0017	1290

3 & 4.

Costs of ending work in process inventory and units transferred out.

	Mixing	Materials	Conversion	Total
Ending Work in process inventory
Equivalent units	2	0.4	0.2
Cost per equivalent unit	2220	177	1290
Cost of ending work in process inventory	4440	70.8	258	4768.8
Units completed and transferred out
Units transferred to next department	119	119	119
Cost per equivalent unit	2220	177	1290
Cost of units transferred out	264180	21063	153510	438753

5.

Cost reconciliation:

Cost of beginning WIP inventory = 4624+106+628 =5358

Cost added to production during the year = 263996+ 21028 + 153140 = 438,164