Question

Units to be accounted for:
Work in process, April 1 (materials 90%          complete; conversion 80% complete)	9,700
Started into production	31,900
Total units to be accounted for	41,600
Units accounted for as follows:
Transferred to next department	27,600
Work in process, April 30 (materials 75%          complete; conversion 50% complete)	14,000
Total units accounted for	41,600

Cost Reconciliation
Cost to be accounted for:
Work in process, April 1	$	33,853
Cost added during the month		110,428
Total cost to be accounted for	$	144,281
Cost accounted for as follows:
Work in process, April 30	$	36,365
Transferred to next department		107,916
Total cost accounted for	$	144,281

Management would like some additional information about Cooperative San José’s operations.

Required:

1.	What were the equivalent units for the month?

  

2.

What were the costs per equivalent unit for the month? The beginning inventory consisted of the following costs: materials, $22,989; and conversion cost, $10,864. The costs added during the month consisted of: materials, $74,928; and conversion cost, $35,500. (Round your answers to 2 decimal places.)

  

3.	How many of the units transferred to the next department were started and completed during the month?

  

4.	The manager of the Mixing Department stated, “Materials prices jumped from about $2.10 per unit in March to $2.60 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.60 per unit for the month.” Should this manager be rewarded for good cost control?
	Yes No

Cooperative San José of southern Sonora state in Mexico makes a unique syrup using cane sugar and local herbs. The syrup is sold in small bottles and is prized as a flavoring for drinks and for use in desserts. The bottles are sold for $12 each. The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes them in the proper proportions in large vats. The company uses the weighted-average method in its process costing system.

A hastily prepared report for the Mixing Department for April appears below:

Answer 1

1. Equivalent units of production:

	Materials	Conversion
Transferred to next department	27,600	27,600
Ending work in process:
Materials: 14,000 units * 75% complete	10,500
Conversion: 14,000 units * 50% complete		7,000
Equivalent units of production	38,100	34,600

2. Cost per equivalent unit for the month:

	Materials	Conversion
Cost of beginning work in process	$22,989	$10,864
Cost added during the period	$74,928	$35,500
Total cost (a)	$97,917	$46,364
Equivalent units of production	38,100	34,600
Cost per equivalent unit (a / b)	2.57	1.34

3.

Total units transferred	27,600
Less: units in the beginning inventory	10,500
Units started and completed during April	17,100

4. No, the manager should not be rewarded for good cost control.The Mixing department's low unit cost for April occured because the costs of the prior month have been averaged with April's costs. This is the major criticism of the weighted average method.