Question

In: Accounting

Old Country Links, Inc., produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In...

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 7 100 % 60 % 50 %
Work in process inventory, September 30 7 100 % 20 % 10 %


Mixing Materials Conversion
Work in process inventory, September 1 $ 15,778 $ 98 $ 644
Cost added during September $ 243,422 $ 25,070 $ 118,741


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, 113 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.

Solutions

Expert Solution

1 Calculation of equivalent units of production for mixing, materials, and conversion for the month of September.
Mixing Materials Conversion
Units transferred to the next department                           113.00                        113.00                               113.00
Ending work in process:
Mixing: 7 units × 100% complete                               7.00
Materials: 7 units × 20% complete                            1.40
Conversion: 7 units × 10% complete                                    0.70
Equivalent units of production                           120.00                        114.40                               113.70
2 Calculation of cost per equivalent unit for mixing, materials, and conversion for the month of September.
Mixing Materials Conversion
Cost of beginning work in process inventory $                15,778.00 $                      98.00 $                           644.00
Cost added during September $              243,422.00 $             25,070.00 $                  118,741.00
Total cost $              259,200.00 $             25,168.00 $                  119,385.00
Equivalent units of production                           120.00                        114.40                               113.70
Costs per equivalent unit $                   2,160.00 $                   220.00 $                       1,050.00
3 Calculation of Cost of ending work in process inventory for mixing, materials, conversion, and in total for September.
Mixing Materials Conversion Total
Ending work in process inventory:
Equivalent units of production                               7.00                            1.40                                    0.70
Cost per equivalent unit $                   2,160.00 $                   220.00 $                       1,050.00
Cost of ending work in process inventory $                15,120.00 $                   308.00 $                           735.00 $    16,163.00
4 Calculation of cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total for Sept
Mixing Materials Conversion Total
Units completed and transferred out:
Units transferred to the next department                           113.00                        113.00                               113.00
Cost per equivalent unit 2160 220 1050
Cost of units transferred out                  244,080.00                  24,860.00                       118,650.00 $ 387,590.00
5 Cost reconciliation report
Cost of beginning work in process inventory $    16,520.00
Cost added to production during the period $ 387,233.00
Total cost to be accounted for $ 403,753.00
Costs accounted for as follows:
Cost of ending work in process inventory $    16,163.00
Cost of units transferred out $ 387,590.00
Total cost accounted for $ 403,753.00

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