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

Mixing    Materials    Conversion
Work in process inventory, September 1    $    27,200    $    90    $    4,880
Cost added during September $    409,700    $    35,550    $    225,350

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, 160 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:

Computation of Equivalent unit of Production - Weighted Average - Casing and Curing Department
Particulars	Physical Units	Mixing	Material	Conversion
Unit completed & Transferred out	160	160	160	160
Closing WIP:	10
Mixing (100%)		10
Material (20%)			2
Conversion (10%)				1
Equivalent units of production	170	170	162	161

Solution 2:

Computation of Cost per equivalent unit of Production - Weighted Average - Casing and Curing Department
Particulars	Mixing	Material	Conversion
Opening WIP	$27,200	$90	$4,880
Cost Added during September	$4,09,700	$35,550	$2,25,350
Total cost to be accounted for	$4,36,900	$35,640	$2,30,230
Equivalent units of production	$170	$162	$161
Cost per Equivalent unit	$2,570.00	$220.00	$1,430.00

Solution 3&4:

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average- Casing and Curing Department
Particulars	Mixing	Material	Conversion	Total
Equivalent unit of Ending WIP	10	2	1
Cost per equivalent unit	$2,570.0	$220.0	$1,430.0
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$25,700	$440	$1,430	$27,570
Units completed and transferred	160	160	160
Cost of units completed & Transferred to finished goods (Unit completed * cost per equivalent unit)	$4,11,200	$35,200	$2,28,800	$6,75,200

Solution 5:

Cost Reconciliation Report - Casing and Curing Department
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($27200+90+4880)	$32,170
Cost added to production ($409700+35550+225350)	$6,70,600
Total Cost to be accounted for	$7,02,770
Costs accounted for as follows:
Cost of unit transferred out	$6,75,200
Ending WIP:
Mixing	$25,700
Material	$440
Conversion	$1,430
Total cost accounted for	$7,02,770