Chapter 5, Problem 18P

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 process costing system.
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:

1. What were the Mixing Department’s equivalent units of production for materials and conversion for April?
2. 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.
3. How many of the units transferred out of the Mixing Department in April were started and completed during that month?
4. 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.