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 Work in process inventory, September 30 100 % 100 % 60 % 20 % 50 % 10% Mixing Materials Conversion Work in process inventory, September 1 Cost added during September $8,874 366 1,056 189,846 24,412 154,176 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, 138 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

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Answer 1

Answer

• All working forms part of the answer
• Requirement 1

Statement of Equivalent Units
		Mixing		Material		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	138	100%	138.0	100%	138.0	100%	138.0
Closing WIP	6	100%	6.0	20%	1.2	10%	0.6
		Total	144.0 = ANswer	Total	139.2 =Answer	Total	138.6 = Answer

• Requirement 2

Cost per Equivalent Units
COST	Mixing	Material	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$               8,874.00	$                366.00	$                1,056.00	$            10,296.00
Cost incurred during period	$          189,846.00	$          24,412.00	$            154,176.00	$          368,434.00
Total Cost to be accounted for	$          198,720.00	$          24,778.00	$            155,232.00	$          378,730.00
Total Equivalent Units	144.0	139.2	138.6
Cost per Equivalent Units	$          1,380 = Answer	$            178= Answer	$            1,120 = Answer

• Requirement 3

	Mixing	Material	Conversion Cost	TOTAL
Cost of ending WIP Inventory	$ 8280 [6 units x $ 1380]	$                214 [1.2 units x $ 178]	$ 672 [0.6 units x $ 1120]	$ 9,166

• Requirement 4

	Mixing	Material	Conversion Cost	TOTAL
Cost of units transferred out	$ 190,440 [138 units x $ 1380]	$                24,564 [138 units x $ 178]	$ 154,560 [138 units x $ 1120]	$ 369,564

• Requirement 5

Cost reconciliation
Costs to be accounted for:
WIP Sep 1 [8874 + 366 + 1056]	$ 10,296
Cost added during Sept [189846 + 24412 +154176]	$ 368,434
Total Cost to be accounted for	$ 378,730
Costs accounted for as follows:
Cost of ending WIP Inventory	$ 9,166
Cost of units transferred out	$ 369,564
Total cost accounted for	$ 378,730