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	3	100	%	60	%	50	%
Work in process inventory, September 30	3	100	%	20	%	10	%

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	7,002	$	33	$	1,260
Cost added during September	$	284,268	$	18,904	$	173,342

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, 130 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

Solution

	Mixing	Material	Conversion
Equivalent Units of Production	133.0	130.6	130.3

.

	Mixing	Material	Conversion
Cost per equivalent Unit	$          2,190.000	$       145.000	$          1,340.000

.

	Mixing	Material	Conversion cost	Total
Ending Inventory	$ 6,570	$ 87	$ 402	$ 7,059

.

	Mixing	Material	Conversion cost	Total
Units Completed and transferred	$ 284,700	$ 18,850	$ 174,200	$ 477,750

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 8,295
Cost transferred in	$ 284,268
Cost incurred during period	$ 192,246
Total cost to be accounted for	$ 484,809
Costs accounted for as follows:
Cost of Units Transferred Out	$ 477,750
Cost of Ending Wip	$ 7,059
Total cost accounted for	$ 484,809

Working

Statement of Equivalent Units(Weighted average)
		Mixing		Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	130	100%	130	100%	130.0	100%	130
Closing WIP	3	100%	3	20%	0.6	10%	0.30
Total	133		133	Total	130.6	Total	130

.

Cost per Equivalent Units (Weighted average)
COST	Mixing	Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost	$            7,002.00	$ 33	$ 1,260	$ 8,295
Cost incurred during period	$       284,268.00	$ 18,904	$ 173,342	$ 476,514
Total Cost to be accounted for	$ 291,270	$ 18,937	$ 174,602	$ 484,809
Total Equivalent Units	133.0	130.6	130.3
Cost per Equivalent Units	$          2,190.000	$       145.000	$          1,340.000

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Mixing	$            2,190.00	3	$             6,570.00	130	$ 284,700
Material	$ 145.00	1	$                   87.00	130	$ 18,850
Conversion cost	$ 1,340.00	0	$                402.00	130	$ 174,200
TOTAL	$ 484,809	TOTAL	$ 7,059	TOTAL	$ 477,750