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 100 % 60 % 50% 100% 20 % 10 % Work in process inventory, September 1 Work in process inventory, September 30 Work in process inventory, September 1 Cost added during September Mixing $ 13,962 $ 316,788 Materials Conversion $ 24 $ 5,046 $ 29,269 $ 249,834 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, 141 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	147.0	142.2	141.6

.

	Mixing	Material	Conversion
Cost per equivalent Unit	$            2,250.00	$         206.00	$             1,800.00

.

	Mixing	Material	Conversion cost	Total
Ending Inventory	$ 13,500	$ 247	$ 1,080	$ 14,827

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	Mixing	Material	Conversion cost	Total
Units Completed and transferred	$ 317,250	$ 29,046	$ 253,800	$ 600,096

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Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 19,032
Cost transferred in	$ 316,788
Cost incurred during period	$ 279,103
Total cost to be accounted for	$ 614,923
Costs accounted for as follows:
Cost of Units Transferred Out	$ 600,096
Cost of Ending Wip	$ 14,827
Total cost accounted for	$ 614,923

Working

Statement of Equivalent Units(Weighted average)
		Mixing		Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	141	100%	141	100%	141.0	100%	141
Closing WIP	6	100%	6	20%	1.2	10%	1
Total	147		147	Total	142.2	Total	142

.

Cost per Equivalent Units (Weighted average)
COST	Mixing	Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost	$          13,962.00	$ 24	$ 5,046	$ 19,032
Cost incurred during period	$      3,16,788.00	$ 29,269	$ 249,834	$ 595,891
Total Cost to be accounted for	$ 330,750	$ 29,293	$ 254,880	$ 614,923
Total Equivalent Units	147	142	142
Cost per Equivalent Units	$          2,250.000	$       205.999	$          1,800.000

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Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Mixing	$            2,250.00	6	$          13,500.00	141	$ 317,250
Material	$ 206.00	1	$                247.20	141	$ 29,046
Conversion cost	$ 1,800.00	1	$             1,080.00	141	$ 253,800
TOTAL	$ 614,923	TOTAL	$ 14,827	TOTAL	$ 600,096