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	4	100	%	60	%	50	%
Work in process inventory, September 30	4	100	%	20	%	10	%

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	7,244	$	28	$	3,140
Cost added during September	$	221,546	$	22,718	$	226,308

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, 133 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 unit

	Mixing	Material	Conversion
Unit transferred out	133	133	133
Ending WIP	4	4*20% = 0.80	4*10% = 0.40
Equivalent unit	137	133.80	133.40

2) Cost per equivalent unit

	Mixing	Material	Conversion
Beginning WIP	7244	28	3140
Cost added	221546	22718	226308
Total Cost	228790	22746	229448
Equivalent unit	137	133.80	133.40
Cost per equivalent unit	1670	170	1720

3) Cost of ending WIP

	Mixing	Material	Conversion	Total
Cost of ending WIP	4*1670 = 6680	170*.80 = 136	1720*.40 = 688	7504

4) Cost of Unit transferred out

	Mixing	Material	Conversion	Total
Cost of Unit transferred out	222110	22610	228760	473480

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	10412
Cost added	470572
Total cost to be accounted for	480984
Cost accounted as
Cost of unit transferred out	473480
Ending WIP	7504
Total Cost accounted as	480984