Question

Problem 5-18 Interpreting a Report-Weighted-Average Method [LO5-2, LO5-3, LO5-4] 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) Started into production 12,500 30,300 42,800 Total units to be accounted for Units accounted for as follows: Transferred to next department Work in process, April 30 (materials 75% complete ; 29,200 13,600 42,800 conversion 50% complete) Total units accounted for Cost Reconciliation Cost to be accounted for: Work in process, April l $ 37,125 92.191 Cost added during the month Total cost to be accounted for Cost accounted for as follows: ş 129,316 Work in process, April 30 30,328

Answer 1

Required 1
						Materials	CC
	Equivalent units of production					39400	36000
	working notes:						EUP		EUP
					units	%-mat	Materials	%-CC	CC
	units trasnsferred to next department				29,200	100%	29200	100%	29200
	Ending work in process				13,600	75%	10200	50%	6800
	Equivalent units of production				42,800		39400		36000
Required 2
						Materials	CC
	cost per equivalent units					2.14	1.25
						materials	CC	total
	Beginning work in process cost					24,250	12,875	37,125
	cost added during the year					60,066	32,125	92,191
	total cost added					84,316	45,000	129,316
	equivalent units					39400	36000
	cost per equivalent units					2.14	1.25	3.39
Required 3
	Units started and completed during April					16,700
Required 4	No .The manager should not be rewarded .In weighted average method, the costs of prior
	period get mixed with the costs of current period.Thus if cost in March is							2
	and in April it is		2.5	,the average cost would be less than				2.5
	in the weighted average cost method.