Concept explainers
Interpreting a Report-Weighted-Average Method
Cooperative San Jose’ 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
A hastily prepared report for the Mixing Department for April appears below:
Management would like some additional information about Cooperative San Jose’s operations.
Required:
- What were the Mixing Department’s equivalent units of production for materials and conversion for April?
- What were the Mixing Department’s cost per equivalent unit for materials and conversion for April? The beginning inventory consisted of the following cost: materials, $67,800; and conversion cost, $30,200. The costs added during the month consisted of: materials, $579,000; and conversion cost, $248,000.
- How many of the units transferred out of the Mixing Department in April were started and completed during that month?
- The manager of the Mixing Department stated, “Materials prices jumped from about $2.50 per unit in March to $3 per unit in April, but due to good cost control I was able to hold our materials cost to less than $3 per units for the month.” Should this manger be rewarded for good cost control? Explain.
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- 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) 30,000 Started into production 200,000 Total units to be accounted for 230,000 Units accounted for as follows: Transferred to next department 190,000 Work in process, April 30 (materials 75% complete;conversion 60% complete) 40,000 Total units accounted for 230,000…arrow_forwardAmazon Beverages produces and bottles a line of soft drinks using exotic fruits from Latin America and Asia. The manufacturing process entails mixing and adding juices and coloring ingredients at the bottling plant, which is a part of Mixing Division. The finished product is packaged in a company-produced glass bottle and packed in cases of 24 bottles each. Because the appearance of the bottle heavily influences sales volume, Amazon developed a unique bottle production process at the company’s container plant, which is a part of Container Division. Mixing Division uses all of the container plant’s production. Each division (Mixing and Container) is considered a separate profit center and evaluated as such. As the new corporate controller, you are responsible for determining the proper transfer price to use for the bottles produced for Mixing Division. At your request, Container Division’s general manager asked other bottle manufacturers to quote a price for the number and sizes…arrow_forwardKardash Cosmetics purchases flowers in bulk and processes them into perfume. From a certain mix of petals, the firm uses Process A to generate Seduction, its high-grade perfume, as well as a certain residue. The residue is then further treated, using Process B, to yield Romance, a medium-grade perfume. An ounce of residue typically yields an ounce of Romance. In July, the company used 25,000 pounds of petals. Costs involved in Process A, i.e., reducing the petals to Seduction and the residue, were: DirectMaterials–$440,000;DirectLabor–$220,000;OverheadCosts–$110,000.Direct Materials–$440,000; Direct Labor–$220,000; Overhead Costs–$110,000. The additional costs of producing Romance in Process B were: DirectMaterials–$22,000;DirectLabor–$50,000;OverheadCosts–$40,000.Direct Materials–$22,000; Direct Labor–$50,000; Overhead Costs–$40,000. During July, Process A yielded 7,000 ounces of Seduction and 49,000 ounces of residue. From this, 5,000 ounces of Seduction were packaged and sold for…arrow_forward
- Kardash Cosmetics purchases flowers in bulk and processes them into perfume. From a certain mix of petals, the firm uses Process A to generate Seduction, its high-grade perfume, as well as a certain residue. The residue is then further treated, using Process B, to yield Romance, a medium-grade perfume. An ounce of residue typically yields an ounce of Romance. In July, the company used 25,000 pounds of petals. Costs involved in Process A, i.e., reducing the petals to Seduction and the residue, were: DirectMaterials–$440,000;DirectLabor–$220,000;OverheadCosts–$110,000.Direct Materials–$440,000; Direct Labor–$220,000; Overhead Costs–$110,000. The additional costs of producing Romance in Process B were: DirectMaterials–$22,000;DirectLabor–$50,000;OverheadCosts–$40,000.Direct Materials–$22,000; Direct Labor–$50,000; Overhead Costs–$40,000. During July, Process A yielded 7,000 ounces of Seduction and 49,000 ounces of residue. From this, 5,000 ounces of Seduction were packaged and sold…arrow_forwardBoney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $53 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $25 or processed further for $18 to make the end product industrial fiber that is sold for $39. The beet juice can be sold as is for $32 or processed further for $28 to make the end product refined sugar that is sold for $79. What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is?arrow_forwardPerfume manufacturer purchases flowers in bulk and processes them into perfume. From a certain mix of petals, the firm uses Process A to generate Seduction, its high grade perfume, as well as a certain residue. The residue is then further treated, using Process B, to yield Romance, a medium-grade perfume. An ounce of residue typically yields an ounce of Romance. In July, the company uses 25,000 pounds of petals. Costs involved in Process A, i,e., reducing the petals to Seduction and the residue, were: Direct Materials = $440,000 Direct Labour = $220,000 Overhead Costs = $110,000 The additional costs of producing Romance in Process B were: Direct Materials = $22,000 Direct Labour = $50,000 Overhead Costs = $40,000 During July, Process A yielded 7,000 ounces of Seduction and 49,000 ounces of residue. From this, 5,000 ounces of Seduction were packaged and sold for $109.50 an ounce. Also, 28,000 ounces of Romance were processed in Process B and then packaged and sold for $31.50 an ounce.…arrow_forward
- KLM, Inc., processes sugar beets in batches. A batch of sugar beets costs $51 to buy from farmers and $16 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $23 or processed further for $18 to make the end product industrial fiber that is sold for $47. The beet juice can be sold as is for $46 or processed further for $20 to make the end product refined sugar that is sold for $59. How much profit (loss) does the company make by processing the intermediate product beet julce into refined sugar rather than selling it as is?arrow_forwardBoney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $59 to buy from farmers and $18 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $29 or processed further for $27 to make the end product industrial fiber that is sold for $75. The beet juice can be sold as is for $50 or processed further for $31 to make the end product refined sugar that is sold for $75. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all? Multiple Choice O $15 per batch $16 per batch ($4) per batch ($135) per batcharrow_forwardBoney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $65 to buy from farmers and $24 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $35 or processed further for $39 to make the end product industrial fiber that is sold for $87. The beet juice can be sold as is for $56 or processed further for $43 to make the end product refined sugar that is sold for $87. What is the financial advantage (disadvantage) for the company from processing one batch of sugar beets into the end products industrial fiber and refined sugar rather than not processing that batch at all?arrow_forward
- Stinehelfer Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $56 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $24 or processed further for $12 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $43 or processed further for $29 to make the end product refined sugar that is sold for $91. What is the financial advantage (disadvantage) for the company from processing the intermediate product beet juice into refined sugar rather than selling it as is? Multiple Choice ($50) ($16) $6 $19 身arrow_forwardIsaac Corporation processes sugar beets in batches that it purchases from farmers for $47 a batch. A batch of sugar beets costs $14 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $22 or processed further for $13 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $45 or processed further for $27 to make the end product refined sugar that is sold for $67. Which of the intermediate products should be processed further? A. beet fiber should NOT be processed into industrial fiber; beet juice should NOT be processed into refined sugar B. beet fiber should NOT be processed into industrial fiber; beet juice should be processed into refined sugar C. beet fiber should be processed into industrial fiber; beet juice should NOT be processed into refined sugar D. beet fiber should be processed into industrial fiber; beet juice should be…arrow_forwardKosakowski Corporation processes sugar beets in batches. A batch of sugar beets costs $66 to buy from farmers and $17 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $23 or processed further for $13 to make the end product industrial fiber that is sold for $36. The beet juice can be sold as is for $42 or processed further for $20 to make the end product refined sugar that is sold for $84. How much more profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar? Select one: a. $22 b. ($18) c. ($116) d. $4arrow_forward
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