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 7 100% 60% 50% 7 100% 20% 103 Work in process inventory, September 1 Work in process inventory, September 30 Work in process inventory, September 1 Cost added during September Mixing $ 13,692 $ 205,548 Materials Conversion $ 35 $ 3,563 $ 19,947 $ 163, 181 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, 109 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

Solution

1) Equivalent unit

	Mixing	Material	Conversion
Unit transferred out	109	109	109
Ending WIP	7	7*20% = 1.40	7*10% = 0.70
Equivalent unit	116	110.40	109.70

2) Cost per equivalent unit

	Mixing	Material	Conversion
Beginning WIP	$13,692	$35	$3,563
Cost added	$2,05,548	$19,947	$1,63,181
Total cost	$2,19,240	$19,982	$1,66,744
Equivalent unit	116	110.40	109.70
Cost per equivalent unit	$1,890	$181	$1,520

3) Cost of ending WIP

	Mixing	Material	Conversion	Total
Cost of ending WIP	7*$1890 = $13,230	1.4*$181 = $253	0.7*1$520 = $1,064	$14,547

4) Cost of unit transferred out

	Mixing	Material	Conversion	Total
Cost of unit transferred out	109*$1890 = $206,010	109*$181=$19,729	109*$1520=$165,680	$3,91,419

5) Cost reconciliation

Cost accounted for
Beginning WIP	$17,290
Cost added	$388,676
Total cost accounted for	$405,966
Cost accounted as
Cost of unit transferred out	$391,419
Cost of ending WIP	$14,547
Total cost accounted as	$4,05,966

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