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 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, 60 batches (i.e., units) were completed and transferred to the Packaging Department. Required: For September: Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion. Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion. Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total. Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total. Prepare a cost reconciliation report for the Casing and Curing Department.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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
| 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 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, 60 batches (i.e., units) were completed and transferred to the Packaging Department.
Required:
For September:
- Determine the Casing and Curing Department's equivalent units of production for mixing, materials, and conversion.
- Compute the Casing and Curing Department's cost per equivalent unit for mixing, materials, and conversion.
- Compute the Casing and Curing Department's cost of ending work in process inventory for mixing, materials, conversion, and in total.
- Compute the Casing and Curing Department's cost of units transferred out to the Packaging Department for mixing, materials, conversion, and in total.
- Prepare a cost reconciliation report for the Casing and Curing Department.
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