Cooperative San Jose of southern Sonora state in Mexico makes a unique syrup using cane sugar and

Question:

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

Cost Reconciliation
Cost to be accounted for:
Work in process, April 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 98,000
Cost added during the month . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      827,000
Total cost to be accounted for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 925,000
Cost accounted for as follows:
Work in process, April 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 119,400
Transferred to next department . . . . . . . . . . . . . . . . . . . . . . . . . . .      805,600
Total cost accounted for. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 925,000
Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               $618,000
Work in Process—Blending Department . . . . . . . . . . . . . .                 $65,000
Finished Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 $20,000

Management would like some additional information about Cooperative San José’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 costs: 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 unit for the month.” Should this manager be rewarded for good cost control? Explain.

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Related Book For  answer-question

Managerial Accounting

ISBN: 9781260247787

17th Edition

Authors: Ray Garrison, Eric Noreen, Peter Brewer

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