Problem 5-13 Comprehensive Problem; Second Production Department-Weighted-Average Method [LO5-2, LO5-3, LO5-4, LO5-5] 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:

Question Completion:

Data for September for the Casing and Curing Department follow:

                                                                        Percent Completed

                                                           Units  Mixing   Materials  Conversion

Work in process inventory, Sept. 1       7      100%         60%         50%

Work in process inventory, Sept 30    7      100%          20%         10%

Costs:

                                                             Mixing     Materials    Conversion

Work in process inventory, Sept. 1    $13,006          $112           $11,193

Costs added during September     $128,404     $11,852         $110,310

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, 72 batches (i.e., units) were completed and transferred to the Packaging Department.

Old Country Links, Inc.

Required:

1. Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion for the month of September:

                                                       Mixing     Materials    Conversion

Equivalent units of production:

Ending Work in process                     7                1.4               0.7

Completed and transferred out       72              72               72

Equivalent units                                79             73.4             72.7

2. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion for the month of September.

                                                       Mixing     Materials    Conversion

Total costs of production           $141,410       $11,964       $114,503

Equivalent units                                79              73.4             72.7

Cost per equivalent unit:              $1,790           $163          $1,575

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     Materials    Conversion   Total Cost

Cost per equivalent unit:        $1,790      $163          $1,575

Equivalent units of Ending WIP   7             1.4               0.7

Ending WIP                           $12,530         $228        $1,103         $13,861

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     Materials    Conversion   Total Cost

Cost per equivalent unit:   $1,790         $163          $1,575

Transferred out                      72              72                72

Cost transferred out      $128,880     $11,736        $113,400    $254,016

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

Costs to be accounted for:

Cost of beginning WIP                     $17,311

Costs added to production          250,566

Total costs to be accounted for $267,877

Costs accounted for:

Cost of Ending WIP                      $13,861

Cost of units completed

        & transferred out             $254,016

Total costs accounted for        $267,877

Explanation:

a) Total Costs of production:

Costs:

                                                             Mixing     Materials    Conversion

Work in process inventory, Sept. 1    $13,006          $112           $4,193

Costs added during September     $128,404     $11,852        $110,310

Total costs of production                  $141,410     $11,964       $114,503

b) Equivalent unit of Ending WIP and beginning WIP

Ending Work in process        7 (7 x 100%)      1.4 (7 x 20%)    0.7 (7 x 10%)

Beginning Work in process  7 (7 x 100%)      4.2 (7 x 60%)    3.5 (7 x 50%)

c) In using the weighted-average method, Old Country Links, Inc. calculates the equivalent units of production by adding the units transferred to the Packaging Department during the period and the equivalent units in the Casing and Curing Department's ending work in process inventory.  Old Country Links, Inc. uses one Work in Process account to accumulate costs for all jobs in each department.

the answer is account d