Question

ld 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.

Answer 1

1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September.

	Mixing	Material	Conversion
Unit transferred out	113	113	113
Ending work in process	7	7*20% = 1.40	7*10% = 0.70
Equivalent unit of production	120	114.40	113.70

2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September.

	Mixing	Material	Conversion
Beginning work in process	15778	98	644
Cost added	243422	25070	118741
Total cost	259200	25168	119385
Equivalent unit	120	114.40	113.70
Cost per equivalent unit	2160	220	1050

3. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total for September.

	Mixing	Material	Conversion	Total
Cost of ending work in process	7*2160 = 15120	1.4*220 = 308	1050*.70 = 735	16163

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.

	Mixing	Material	Conversion	Total
Cost of unit transferred out	113*2160 = 244080	113*220 = 24860	113*1050 = 118650	387590

5. Prepare a cost reconciliation report for the Casing and Curing Department for September.

Cost to be accounted for
Beginning work in process	16520
Cost added	387233
Total cost to be accounted for	403753
Cost accounted as
Cost of unit transferred out	387590
Cost of ending work in process	16163
Total cost accounted as	403753