Item 3 10 points Cooperative San José of southern Sonora state in Mexico makes a
ID: 2329016 • Letter: I
Question
Item 3 10 points
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:
Units to be accounted for:
Work in process, April 1 (materials 90% complete;
conversion 80% complete)
12,700
Started into production
31,600
Total units to be accounted for
44,300
Units accounted for as follows:
Transferred to next department
40,300
Work in process, April 30 (materials 75% complete;
conversion 50% complete)
4,000
Total units accounted for
44,300
Cost Reconciliation
Cost to be accounted for:
Work in process, April 1
$
45,339
Cost added during the month
125,838
Total cost to be accounted for
$
171,177
Cost accounted for as follows:
Work in process, April 30
$
10,380
Transferred to next department
160,797
Total cost accounted for
$
171,177
Management would like some additional information about Cooperative San José’s operations.
Required:
1. What were the Mixing Department's equivalent units of production for materials and conversion for April?
2. What were the Mixing Department's cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following costs: materials, $27,940; and conversion cost, $17,399. The costs added during the month consisted of: materials, $75,980; and conversion cost, $49,858.
3. How many of the units transferred out of the Mixing Department in April were started and completed during that month?
4. The manager of the Mixing Department stated, “Materials prices jumped from about $2.05 per unit in March to $2.55 per unit in April, but due to good cost control I was able to hold our materials cost to less than $2.55 per unit for the month.” Should this manager be rewarded for good cost control?
Units to be accounted for:
Work in process, April 1 (materials 90% complete;
conversion 80% complete)
12,700
Started into production
31,600
Total units to be accounted for
44,300
Units accounted for as follows:
Transferred to next department
40,300
Work in process, April 30 (materials 75% complete;
conversion 50% complete)
4,000
Total units accounted for
44,300
Explanation / Answer
San José of southern Sonora Units in beginning WIP 12700 Units started into production 31600 Units in ending WIP 4000 Percentage complete for material cost in beginning WIP 90% Percentage complete for conversion cost in beginning WIP 80% Percentage complete for Material cost in ending WIP 75% Percentage complete for conversion cost in ending WIP 50% Beginning Inventory cost Material $ 27,940.00 Conversion cost $ 17,399.00 Cost added during the month Material $ 75,980.00 Conversion $ 49,858.00 Total Cost $ 1,71,177.00 Physical Units Beginning WIP 11430 Units started into prodcution 31600 43030 Units transferred out 40300 Units in Ending WIP 4000 Equivalent Units Direct Material conversion Units transferred out=(A) 40300 40300 1) Ending WIP=(4000*75%) for material,(4000*50%) for conversion=(B) 3000 2000 Equivalent Units=(A)+(B) 43300 42300 Cost per Equivalent Units Direct Material conversion Total Cost 2) Cost in beginning WIP $ 27,940.00 $ 17,399.00 Cost added during the month $ 75,980.00 $ 49,858.00 Total Cost=(A) $ 1,03,920.00 $ 67,257.00 Equivalent Units=(B) 43300 42300 Cost per Equivalent Units=(A)/(B) $ 2.40 $ 1.59 $ 3.99 Cost accounted for Units cost Total Cost 3) Transferred out 40300 $ 3.99 $ 1,60,797.00 Ending WIP Materail 3000 $ 2.40 $ 7,200.00 Conversion 2000 $ 1.59 $ 3,180.00 Total cost accounted for $ 1,71,177.00 4) Yes Manager should be rewarded for good cost control.
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