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	11	100	%	60	%	50	%
Work in process inventory, September 30	11	100	%	20	%	10	%

	Mixing		Materials		Conversion
Work in process inventory, September 1	$	21,736	$	143	$	8,283
Cost added during September	$	150,304	$	15,499	$	133,750

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, 81 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-EUP	Material-EUP	Conversion-EUP
Unit transferrred out	81	81	81
Ending work in process	11	11*20% = 2.2	11*10% = 1.1
Total	92	83.2	82.10

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	21736	143	8283
Cost added during September	150304	15499	133750
Total cost	172040	15642	142033
Equivalent unit	92	83.2	82.10
Cost per equivalent unit	1870	188	1730

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	11*1870 = 20570	2.2*188 = 414	1.1*1730 = 1903	22887

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 units transferred out	81*1870 = 151470	81*188 = 15228	81*1730 = 140130	306828

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

Cost to be accounted for
Beginning work in process	30162
Cost added	299553
Total cost to be accounted for	329715
Cost accounted as
Cost of unit transferred out	306828
Cost of ending work in process	22887
Total cost accounted as	329715