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

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	13,692	$	35	$	3,563
Cost added during September	$	205,548	$	19,947	$	163,181

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, 109 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

Requirement 1

Casing and Curing Department's equivalent units of production

Mixing = 116 units

Materials = 110.40 unis

Conversion = 109.70 units

Requirement 2

Casing and Curing Department's cost per equivalent unit

Mixing = $ 1,890

Materials = $ 181

Conversion = $ 1,520

Requirement 3

Value of Closing Stock
Mixing	$                13,230.00
Material	$                     253.39
Conversion cost	$                  1,064.00
Total	$                14,547.39

Requirement 4

Value of Put and processed
Mixing	$              206,010.00
Material	$                19,728.61
Conversion cost	$              165,680.00
Total	$              391,418.61

Requirement 5

Reconciliation
Cost to account for:
Mixing	$ 219,240.00
Material	$   19,982.00
Conversion	$ 166,744.00
Total	$ 405,966.00
Cost to account for:
Value of Put and processed	$ 391,418.61
Value of Closing Stock	$   14,547.39
Total	$ 405,966.00

Calculations:

Statement of Equivalent Production
Input	Particulars	Output	Mixing		Material		Conversion cost
			%	Units	%	Units	%	Units
116.00	Put and processed	109.00	100%	109.00	100%	109.00	100%	109.00
	Closing stock	7.00	100%	7.00	20%	1.40	10%	0.70
116.00	Total	116.00		116.00		110.40		109.70
	Costs:
	Opening		$          13,692		$                  35		$            3,563
	February		$        205,548		$          19,947		$        163,181
	Total		$        219,240		$          19,982		$        166,744
	Cost per unit		$       1,890.00		$          181.00		$       1,520.00

In case of doubt, please comment.