Old Country Links Inc. produces sausages in three production departments—Mixing,
ID: 2445341 • Letter: O
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 6 100% 60% 50% Work in process inventory, September 30 6 100% 20% 10% Mixing Materials Conversion Work in process inventory, September 1 $ 12,204 $ 54 $ 2,796 Cost added during September $ 174,976 $ 14,485 $ 131,474 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, 92 batches (i.e., units) were completed and transferred to the Packaging Department. Required: 1. Determine the equivalent units for September for mixing, materials, and conversion. (Round your answers to 1 decimal place.) 2. Compute the costs per equivalent unit for September for mixing, materials, and conversion. (Do not round your intermediate calculations.) 3. Determine the total cost of ending work in process inventory and the total cost of units transferred to the Packaging Department in September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.) 4. Prepare a cost reconciliation report for the Casing and Curing Department for September. (Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
Explanation / Answer
Answer:
Opening & Closing Work In Process Inventory is missing in the question...
Old Country Links Inc. uses the weighted-average method of process costing.
As per weighted average method, Closing WIP is valued at Average Production Cost.
Average Production Cost is the aggregated cost of opening WIP and Current Production Cost.
So,
Average Production Cost = Cost of Opening WIP + Current Production Cost
Completed and transferred units to next process = 92 Batches (92 Units)
From the information given in the question, we can find out that
Opening WIP Cost = $ 12,204 + $54 + $2,796 = $15,054
Cost added during September = $174,976 + $14,485 + $131,474 = $320,935
Total Cost (Opening Cost + Cost Added During September) = $15,054 + $320,935 = $335,989
Total Completed Unit = 92 Batches
Statement of Equivalent Production (Casing and Curing Department)
Output
Units
Casing and Curing
Mixing
Material
Conversion
% of Completion
Equivalent Units
% of Completion
Equivalent Units
% of Completion
Equivalent Units
Completed & Transferred to Packing Department
92
100%
92
100%
92
100%
92
Closing Work-in-process
6
100%
6
20%
1.2
10%
0.60
Total Equivalent Unit
98
93.2
92.60
Statement of Cost per Equivalent Unit
Particulars
Calculation
Cost
Opening Work in process (Sept 1)
$12,204 + $54 + $2,796
$15,054
Cost incurred/added during September
$174,976 + $14,485 + $131,474
$320,935
Total Cost
$335,989
Cost per Equivalent Unit = Total Cost / Equivalent Unit
Mixing Cost per Equivalent Unit = ($12204 + $174,976) / 98 = $1910
Material Cost per Equivalent Unit = ($54 + $14,485) / 93.20 = $156
Conversion Cost per Equivalent Unit = ($2,796 + $131,474) / 92.60 = $1450
Cost per Equivalent Completed Unit = $1910 + $156 + $1450 = $3,516
Statement of Evaluation
Particulars
Equivalent Units
Cost Per Equivalent Units
Amount
1
Transferred to next process
92
$3,516
$323,472
2
Closing Work In process
Mixing Cost
6
$1910
$11,460
Material Cost
1.2
$156
$187
Conversion Cost
0.60
$1450
$870
Total Cost
$335,989
Output
Units
Casing and Curing
Mixing
Material
Conversion
% of Completion
Equivalent Units
% of Completion
Equivalent Units
% of Completion
Equivalent Units
Completed & Transferred to Packing Department
92
100%
92
100%
92
100%
92
Closing Work-in-process
6
100%
6
20%
1.2
10%
0.60
Total Equivalent Unit
98
93.2
92.60
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