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	$	7,036	$	176	$	2,384
Cost added during September	$	143,844	$	18,472	$	136,404

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, 88 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

	Equivalent units
	Physical units	Mixing	Material	Conversion
Units completed and transferred	88	88	88	88
Ending work in process	4	4	0.8 (4*20%)	0.4 (4*10%)
Total	92	92	88.8	88.4

2. Cost per equivalent unit

	Mixing	Material	Conversion
Beginning WIP	7,036	176	2,384
Cost added	143,844	18,472	136,404
Total cost	150880	18648	138788
Equivalent unit	92	88.8	88.4
Cost per equivalent unit	1640	210	1570

3. Cost of ending WIP

Mixing (4*$1640)	6560
Material (0.8*$210)	168
Conversion (0.4*$1570)	628
Total	$7356

4. Cost of units transferred out

Mixing (88*$1640)	144320
Material (88*$210)	18480
Conversion (88*$1570)	138160
Total	$300960

5. Cost Reconciliation Report

Cost to account for:	$
Cost of beginning work in process	9596
Cost added during September	298720
Total cost to account for	308316
Cost accounted for:
Cost of units transferred	300960
Cost of ending work in process	7356
Total cost to account for	308316