MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
8th Edition
ISBN: 9781264116737
Author: BREWER
Publisher: MCG
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Chapter 5, Problem 13P

Comprehensive Problem; Second Production Department-Weighted-Average Method

Old Country Links, Inc. produces sausages in three production department-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:

Chapter 5, Problem 13P, Comprehensive Problem; Second Production Department-Weighted-Average Method Old Country Links, Inc.

Required:

  1. Determine the Casing and Curing Department’s equivalent units of production for mixing, material, and conversion for the month of September. Do not round off your computations.
  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 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.

Expert Solution
Check Mark
To determine

Computation of equivalent units for each element of cost, cost per equivalent unit and total cost of ending inventory and completed units describes the steps taken for computation of total units completed and equivalents units of each element of cost. The total cost of ending work in process and completed and transferred out shall be determined based on equivalent units and cost per equivalent units. The total units completed are computed by considering the total units in process and ending work in process units. The reconciliation statement of total cost to account and accounted has to be reconciled.

Requirement1:

TheEquivalent number units of each element of cost

Answer to Problem 13P

Solution: The total units completed and transferred out from process and equivalent units shall be as under:

    UNITS TO ACCOUNT FOR:

    Beginning Work in Process units

    Add: Units Started in Process

    Total Units to account for:

    50.00

    1.00

    __________

    51.00

    UNITS TO BE ACCOUNTED FOR:

    Units Completed

    Ending Work in Process

    Total Units to be accounted for:

    50.00

    1.00

    51.00

    ________

    51.00

Explanation of Solution

The computation of total units completed and transferred out shall be based on the total units in the process during the year. The total units to account for in the process is sum of beginning units of work in process and units started in the process during the year. The Ending units of work in process which is still in process at the end of the year shall be deducted from the total to find out the units completed and transferred out.

When the units completed in previous process is transferred to next process, then the cost of such completed units is taken as Transferred-in Cost of next process and the equivalent units for such Transferred in cost shall also be computed along with material and Conversion cost in next process. For computing the equivalent units of Transferred-in cost, equivalents units for units in process at the end shall be taken on the basis of 100% degree of completion as regards to Transferred-in cost (as the processing in previous process is completed in full which is represented by Transferred-in cost)

Requirement2:

Conclusion

To conclude, it must be said that the equivalent units in each inventory shall multiplied with respective cost per equivalent unit and cost of each element is added up to arrive at the total cost of ending work in process and completed units.

Expert Solution
Check Mark
To determine

The Cost perequivalent unit for each element of cost

Answer to Problem 13P

Solution: The statement showing the cost per equivalent unit for element is as under:

    Equivalent Units:
    Transferred in Cost Material Cost Conversion Cost
    % Completion Units % Completion Units % Completion Units
    Units completed and transferred

    Ending Work in Process

    Total Equivalent units

    100%

    100%

    50.00

    1.00

    100%

    80%

    50.00

    0.80

    100%

    70%

    50.00

    0.70

    51 50.8 50.7

Explanation of Solution

The total cost of Transferred-in cost shall be the sum total of transferred in cost included in beginning work in process and added during the current period. The transferred-in cost per equivalent units shall be computed by dividing the total transferred-in cost by equivalent units of respective cost.

Requirement3:

Expert Solution
Check Mark
To determine

The Cost of Ending work in process inventory in respect of material, conversion and in total

Answer to Problem 13P

Solution: The statement showing the cost of ending work in process is as under:

    Ending Work in Process (1 unit)

    Equivalent unitCost per EUTotal Cost
    Transferred-in cost1.0016301630
    Material cost0.8012096
    Conversion Cost0.70850595
    Total cost of Ending Work in process:2,321

Explanation of Solution

The total cost of ending work in process shall be computed by multiplying the equivalent units of each element in ending work in process by cost per equivalent unit of respective element. The Summation of each element cost is the total cost of ending work in process.

Requirement4:

Expert Solution
Check Mark
To determine

The Cost of goods completed and transferred out

Answer to Problem 13P

Solution: The statement showing the cost of units completed and transferred out shall be as under:

    Units Completed and Transferred out (50 units)

    Equivalent unitCost per EUTotal Cost
    Transferred-in cost50163081500
    Material cost501206000
    Conversion Cost5085042500
    Total Cost of Units completed and transferred out:130000

Explanation of Solution

The total cost of units completed and transferred out shall be computed by multiplying the equivalent units of each element in units completed (which is equal to completed units only) by cost per equivalent unit of respective element. The Summation of each element cost is the total cost of ending work in process.

Requirement5:

Expert Solution
Check Mark
To determine

To show: The reconciliation statement showing the cost to account for and cost accounted for

Answer to Problem 13P

Solution: The reconciliation statement showing the cost to account for and accounted in ending work in process and completed units is as follows:

    RECONCILIATION STATEMENT
    TOTAL COST TO ACCOUNT FOR:

    Transferred-inMaterialConversion
    Beginning work in Process1,67090605
    Cost Added during May81,4606,00642,490
    Total Cost to account for:83,1306,09643,095
    Total Cost to account for:132,321
    TOTAL COST ACCOUNTED FOR:

    Units Completed and Transferred out (50 units)

    Equivalent unitCost per EUTotal Cost
    Transferred-in cost50163081500
    Material cost501206000
    Conversion Cost5085042500
    Total Cost of Units completed and transferred out:130000
    Ending Work in Process (1 unit)

    Equivalent unitCost per EUTotal Cost
    Transferred-in cost1.0016301630
    Material cost0.8012096
    Conversion Cost0.70850595
    Total cost of Ending Work in process:2,321
    Total Cost accounted for:132,321
    Difference (Total cost to account for-Total cost accounted)Nil

Explanation of Solution

The total cost to account for is the total cost of beginning work in process and cost added during the period in the process. The total cost accounted for is the cost assigned to ending work in process and units completed and transferred out.

The reconciliation means there shall be not be any difference between the total cost to account for and total accounted in the period.

Conclusion

To conclude, it must be said that the equivalent units in each inventory shall multiplied with respective cost per equivalent unit and cost of each element is added up to arrive at the total cost of ending work in process and completed units.

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Old Country Links, Incorporated, produces sausages in three production departments—Mixing, Casing and Curing, and Packaging. In the Mixing Department, meats are prepared, ground and mixed with spices. The spiced meat mixture is transferred to the Casing and Curing Department, where the mixture is force-fed into casings and 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 of process costing. Data for September for the Casing and Curing Department follow:   Units Percent Completed 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 $ 1,640 $ 26 $ 105 Cost added during September $ 94,740 $ 8,402 $ 61,197 Mixing cost represents the costs of the spiced meat mixture transferred in from…
Old Country Links, Incorporated, 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:     Units Percent Completed 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 $ 2,325 $ 70 $ 137 Cost added during September $ 275,435 $ 28,882 $ 138,966 Mixing cost represents the costs of the…
Old Country Links, Incorporated, 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 Sept. 1 1 100% 90% 80% Work in Process Inventory Sept. 30 1 100% 80% 70%     Mixing Materials Conversion Work in process inventory, September 1 $ 1,670 $ 90 $ 605 Cost added during September $ 81,460 $ 6,006 $ 42,490 Mixing cost represents the costs of the spiced…

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MANAGERIAL ACCOUNTING

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