Question

Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In...

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 5 100 % 60 % 50 %
Work in process inventory, September 30 5 100 % 20 % 10 %


Mixing Materials Conversion
Work in process inventory, September 1 $ 9,985 $ 110 $ 295
Cost added during September $ 275,015 $ 26,462 $ 153,935


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, 145 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
1) Equivalent Units of Production (EUP) - Weighted Average Method
Units % Mixing EUP-Mix. % Mat. EUP- Mat. % Conv. EUP- Conv.
Units completed and transferred out 145 100% 145 100% 145 100% 145
Units in ending inventory 5 100% 5 20% 1 10% 0.5
Equivalent units of production 150 146 145.5

2)

Cost per Equivalent Unit of Production
Mixing Materials Conversion
Beginning costs $     9,985.00 $            110.00 $        295.00
During the month costs $ 275,015.00 $      26,462.00 $ 153,935.00
Total cost Costs $ 285,000.00 Costs $      26,572.00 Costs $ 154,230.00
÷ Equivalent units of production EUP 150 EUP 146 EUP 145.5
Cost per equivalent unit of production $     1,900.00 $            182.00 $     1,060.00

3)

Cost of ending work in process EUP Cost/ EUP Total Cost
Mixing 5 $ 1,900.00 $         9,500.00
Direct Materials 1 $    182.00 $            182.00
Conversion 0.5 $ 1,060.00 $            530.00
Total cost of ending work in process $      10,212.00

4)

Cost of units transferred out EUP Cost/ EUP Total Cost
Mixing 145 $ 1,900.00 $    275,500.00
Direct Materials 145 $    182.00 $      26,390.00
Conversion 145 $ 1,060.00 $    153,700.00
Total costs transferred out $    455,590.00

5)

Cost reconciliation
Beginning Mixing $         9,985.00
Beginning Material $            110.00
Beginning Conversion $            295.00
Current Mixing $    275,015.00
Current Material $      26,462.00
Current Conversion $    153,935.00
Total costs to account for $    465,802.00
Total costs accounted for $    465,802.00
Cost of units transferred out EUP Cost/ EUP Total Cost
Mixing 145 $ 1,900.00 $    275,500.00
Direct Materials 145 $    182.00 $      26,390.00
Conversion 145 $ 1,060.00 $    153,700.00
Total costs transferred out $    455,590.00
Cost of ending work in process EUP Cost/ EUP Total Cost
Mixing 5 $ 1,900.00 $         9,500.00
Direct Materials 1 $    182.00 $            182.00
Conversion 0.5 $ 1,060.00 $            530.00
Total cost of ending work in process $      10,212.00
Total costs accounted for $    465,802.00
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