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 9 100 % 60 % 50 % Work in process inventory, September 30 9 100 % 20 % 10 % Mixing Materials Conversion Work in process inventory, September 1 $ 21,789 $ 504 $ 2,160 Cost added during September $ 336,171 $ 27,958 $ 180,987 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, 148 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.

		Equivalent units
	Physical units	Mixing	Material	Conversion
Units completed and transferred	148	148	148	148
Ending work in process	9	9	1.8 (9*20%)	0.9 (9*10%)
Total	157	157	149.8	148.9

2.

	Mixing	Material	Conversion
Cost in beginning work in process	$21,789	$504	$2,160
Cost added during September	336,171	27,958	180,987
Total costs	$357,960	$28,462	$183,147
Equivalent units	157	149.8	148.9
Cost per equivalent units	$2,280	$190	$1,230

3.

Cost of ending work in process:

Mixing (9*$2,280)	$20,520
Material (1.8*$190)	342
Conversion (0.9*$1,230)	1,107
Total	$21,969

4.

Cost of units transferred out :

Mixing (148*$2,280)	$337,440
Material (148*$190)	28,120
Conversion (148*$1,230)	182,040
Total	$547,600

5.

Cost Reconciliation Report
Cost to account for:
Cost of beginning work in process	$24,453
Cost added during September	545,116
Total cost to account for	$569,569
Cost accounted for:
Cost of units transferred	547,600
Cost of ending work in process	21,969
Total cost to account for	$569,569