Question

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 1 100 % 60 % 50 %
Work in process inventory, September 30 1 100 % 20 % 10 %


Mixing Materials Conversion
Work in process inventory, September 1 $ 1,671 $ 15 $ 386
Cost added during September $ 215,929 $ 27,701 $ 179,297


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, 135 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.

Business   Accounting   
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Homework Answers

Answer #1
1
Mixing Materials Conversion
Units completed and transferred out 135 135 135
Work in process, ending 1 0.2 0.1
Equivalent units of production 136.0 135.2 135.1
2
Mixing Materials Conversion
Work in process, September 1 1671 15 386
Cost added during September 215929 27701 179297
Total costs 217600 27716 179683
Divide by Equivalent units of production 136 135.2 135.1
Cost per Equivalent unit 1600 205 1330
3
Mixing Materials Conversion Total
Work in process, ending units 1 0.2 0.1
X Cost per Equivalent unit 1600 205 1330
Cost of ending work in process inventory 1600 41 133 1774
4
Mixing Materials Conversion Total
Units completed and transferred out 135 135 135
X Cost per Equivalent unit 1600 205 1330
Cost of Units completed and transferred out 216000 27675 179550 423225
5
Cost Reconciliation:
Cost to be accounted for:
Cost of Beginning work in Process inventory 2072
Cost added during May 422927
Total Cost to be accounted for 424999
Cost accounted for as follows:
Cost of Units completed and transferred out 423225
Cost of ending work in process inventory 1774
Total Cost accounted for 424999
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