Question

3. Interpreting A Production Report-Weighted-Average Method 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 $12.00 each. (The Mexican currency is the peso and is denoted by S.) 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 Schednle Units to be accounted for work in process, April 1 (materials 90% 30,000 conversion 80% Started into Total units to be accounted for. Units accounted for as follows: Transferred to the next 190,000 Work in process, April 30 (materials 75% conversion 60% 40,000 Total units accounted for Total Cost ost to be accounted for. Work in Cost added d Total cost to be accounted for 98,000 the month $925,000 ost Reconciliation ost accounted for as follows Transferred to the next Work in Total cost accounted for 805 19.400 Cooperative San José has just been acquired by another company, and the management of tbe acquiring company wants some additional information about Cooperative San José's operations. Required: (1). What were the equivalent units for the month? (2). What were the costs per equivalent unit for the month? The beginning inventory consisted of the following costs: materials, $67,800; and conversion cost, S30,200. The costs added during the month consisted of: materials, $579,000: and conversion cost, S248,000 (3). How many of the units transferred to the next department were started and completed during the month? (4). The manager of the Mixing Department, anxious to make a good impression on the new owner stated, "Materials prices jumped from about $2.50 per unit n October to $3.00 per unit n April, but due to good cost control I was able to hold our materials cost to less than $3.00 per unit for the month." Should this manager be rewarded for good cost control? Explain.

Answer 1