Old Country Links, Inc., produces sausages in three production departments—Mixin

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:

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, 112 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.

Percent Completed Units Mixing Materials Conversion Work in process inventory, September 1 3 100 % 60 % 50 % Work in process inventory, September 30 3 100 % 20 % 10 %

Explanation / Answer

Costs Charged to Production Costs of Beginning WIP              6,924 Costs incurred this period          382,905 Total Costs to account for          389,829 Total costs accounted for          389,829 Difference due to rounding cost/unit                     -   Unit Reconciliation Units to account for: Beginning WIP                       3 Started into Production (115 - 3)                  112 Total units to account for                  115 Total units accounted for Completed during the period                  112 Ending WIP                       3 Total units accounted for                  115 Equivalent Units of Production (EUP) - Weighted Average Method Units % Mixing EUP-Mixing % Material EUP-Materials % Conversion EUP-Conversion Completed during the period                  112 100%            112.00 100%            112.00 100%             112.00 Ending WIP                       3 100%                 3.00 20%                 0.60 10%                  0.30 Equivalent Units of Production (EUP)            115.00            112.60             112.30 Cost per EUP Mixing Materials Conversion Beginning WIP              6,609                    24                   291 Cost Incurred during the period          236,041            24,748           122,116 Total Costs Costs          242,650 Costs            24,772 Costs           122,407 Equivalent Units of Production (EUP) EUP            115.00 EUP            112.60 EUP             112.30 Cost per Equivalent Units of Production        2,110.00            220.00         1,090.00 Cost Assignment and Reconciliation Costs Transferred Out EUP Cost per EUP Total Cost Mixing            112.00            2,110.00    236,320.00 Direct Materials            112.00                220.00      24,640.00 Conversion            112.00            1,090.00    122,080.00 Total transferred Out    383,040.00 Costs of Ending WIP EUP Cost per EUP Total Cost Mixing                 3.00            2,110.00        6,330.00 Direct Materials                 0.60                220.00            132.00 Conversion                 0.30            1,090.00            327.00 Total Ending WIP        6,789.00 Total costs accounted for     389,829.00 Answer 1. Mixing Material Conversion Equivalent Units            115.00                112.60            112.30 Answer 2. Mixing Material Conversion Cost per Equivalent Units        2,110.00                220.00        1,090.00 Answer 3. Mixing Material Conversion Total Cost of Ending WIP        6,330.00                132.00            327.00          6,789.00 Answer 4. Mixing Material Conversion Total Cost of Units Transferred - Packaging Deptt.    236,320.00          24,640.00    122,080.00     383,040.00 Answer 5. Costs Charged to Production Costs of Beginning WIP              6,924 Costs incurred this period          382,905 Total Costs to account for          389,829 Total costs accounted for          389,829 Difference due to rounding cost/unit                     -

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