Question

Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system. A hastily prepared report for the Mixing Department for April appears below: 9.600 38.100 47,700 Units to be accounted for: Work in process, April 1 (materials 901 complete; conversion 80complete) Started into production Total units to be accounted for Units accounted for as follows: Transferred to next department Work in process, April 30 (materials 75t complete; conversion 50x complete) Total units accounted for 38,900 8.800 47,700 Cost Reconciliation Cost to be accounted for Work in process, April 1 Cost added during the month Total cost to be accounted for Cost accounted for as follows: Work in process, April 30 Transferred to next department Total cost accounted for $ 33,216 139,870 $173,086 $ 22,154 150,932 $ 173,086 Management would like some additional information about Cooperative San José's operations Required: 1. What were the Mixing Department's equivalent units of production for materials and conversion for April? 2. What were the Mixing Department's cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $20.256; and conversion cost, $12.960. The costs added during the month consisted of: materials, $84,849, and conversion cost $55,021 3. How many of the units transferred out of the Mixing Department in April were started and completed during that month? 4. The manager of the Mixing Department stated, "Materials prices jumped from about $1.95 per unit in March to $2.45 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.45 per unit for the month." Should this manager be rewarded for good cost control? Complete this question by entering your answers in the tabs below. Show less Required 1 Required 2 Required 3 Required 4

Answer 1

According to the requirement of this problem, we have to compute the Equivalent units of Production, Cost per equivalent units, units started and completed.

Requirement 1-: What were the Mixing Department's equivalent units of production for materials and conversion for April?

Solution-: Equivalent units of production

	Materials	Conversion
Equivalent Units of Production (Working Note)	45,500	43,300

Working Note-: Calculation of Equivalent Units of production for Materials and Conversion.

	Units	Material %	Materials	Conversion %	Conversion
Units transferred to next department	38,900	100%	38,900	100%	38,900
Ending Work in Process	8,800	75%	6,600	50%	4,400
Equivalents units of Production	47,700		45,500		43,300

Requirement 2-: What were the Mixing Department's Cost per equivalent units for materials and conversion for April? The beginning inventory consisted of the following costs: materials. $20,256; and the conversion costs, $12,960. The cost added during the month consisted of materials, $84,849 and conversion cost, $55,021.

Solution-: Cost per equivalent units

	Materials	Conversion
Cost per Equivalent units (Working Note)	$2.31	$1.57

Working Note-: Calculation of Cost Per Equivalent Units for Materials and Conversion.

	Materials	Conversion	Total
Beginning Work in Process Cost	$20,256	$12,960	$33,216
Cost added during the year	$84,849	$55,021	$139,870
Total Cost (a)	$105,105	$67,981	$173,086
Equivalent units (b)	45,500	43,300
Cost per equivalent units (a) / (b)	$2.31	$1.57	$3.88

Requirement 3-: How many of the units transferred out of the Mixing Department in April and were started and completed during that month?

Solution-:

Units Started and Completed during the Year (Working Note)

29,300

Working Note-: Calculation of Units started and Completed during the year.

Total units transferred     38,900

Less:- Units in the beginning inventory (9,600)

Units started and completed during April 29,300

Note:- It will assume that the units in the beginning inventory are completed before any other units are completed.

Requirement 4-: The Manager of the Mixing Department stated, "Materials price jumped from $1.95 per unit in March to $2.45 per unit in April, but due to good cost control. I was able to hold our materials cost to less then $2.45 per unit for the month." Should this Manager be rewarded for good cost control?

Solution:- No, The Manager should not be rewarded for good cost control.

The cost of prior period get Mixed with the cost of current period. This is a major criticism of the weighted average.

Thank you.