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:

Units to be accounted for:
Work in process, April 1 (materials 90% complete; conversion 80% complete)	9,700
Started into production	31,200
Total units to be accounted for	40,900
Units accounted for as follows:
Transferred to next department	36,500
Work in process, April 30 (materials 75% complete; conversion 50% complete)	4,400
Total units accounted for	40,900

Cost Reconciliation
Cost to be accounted for:
Work in process, April 1	$	35,308
Cost added during the month		124,498
Total cost to be accounted for	$	159,806
Cost accounted for as follows:
Work in process, April 30	$	11,616
Transferred to next department		148,190
Total cost accounted for	$	159,806

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, $21,728; and conversion cost, $13,580. The costs added during the month consisted of: materials, $75,384; and conversion cost, $49,114.

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 $2.00 per unit in March to $2.50 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.50 per unit for the month.” Should this manager be rewarded for good cost control?

Answer 1

Anso Tolal Unit I Material Conversion Delally - 36,soo Transfered out to next production Dept. 36,500 36,500 2200 Ending wip 4400 3300 4400, 4400 X 75% 50% Equivelent Unite 39,800 38,700 Details Material wip in Beginning 21,728 Cost added during Month 75384 Total lost 97,112 -Equivelent Unity 39,800 Cost per Equerelent Unit 2.44 Unit started and completed Trausfed out unity - Beginning wip 36,500 - 9700 = 26,800 Conversion 13580 49,114 62694 38,700 1.62 3

3 No The Manage should not be Rewarded Because The firm using weighted average method so when The price Rises the ending inventory will be alorage of the price before rises and the Rising Price , And it will be obviously below the rising price.