PROBLEM 4-2 Interpreting a Production Report-Weighted Average Cost Method [LO3 CC11; L04 CC12, 13, 14] CHECK FIGURES (1) (2) Materials: 194,000 equivalent units Conversion: $1.412 per unit 150,000 units Cooperative San Jos 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 flavouring for drinks and desserts. The bottles are sold for $12 each. (The Mexican currency is the peso, denoted by $.) The first stage in the production process is carried out in the Mixing Department, which removes foreign matter from the raw materials and mixes the raw materials in the proper proportions in large vats. The company uses the weighted average cost method in its process costing system. A hastily prepared report for the Mixing Department for April follows: Quantity Schedule Units to be accounted for: Work in process, April 1 (60% materials, 75% conversion cost added last month) 20,000 Started into production 180,000 Total units 200,000 Units accounted for as follows: Transferred to the next department 170,000 Work in process, April 30 (80% materials, 90% conversion cost added this month) 30,000 Total units 200,000 Total Cost Cost to be accounted for: Work in process, April 1 $ 98,000 Cost added during the month 827,000 Total cost $925,000 Cost Reconciliation Cost accounted for as follows: Transferred to the next department $806,855 Work in process, April 30 118,145 Total cost $925,000 Cooperative San Jos has just been acquired by another company, and the management of the acquiring company wants some additional information about Cooperative San Jos's operations. Page 171 Required: 1. What were the equivalent units for the month? 2. What were the costs per equivalent unit for the month? The beginning inventory consisted of the following costs: materials, $67,800; conversion cost, $30,200. The costs added during the month consisted of materials, $579,000; conversion cost, $248,000. 3. How many of the units transferred to the next department were started and completed during the month? 4. The manager of the Mixing Department, anxious to make a good impression on the new owners, stated, Materials prices jumped from about $3.00 per unit in March to more than $3.50 per unit in April, but due to good cost control, I was able to hold our materials cost to less than $3.40 per unit for the month. Should this manager be rewarded for good cost control? Explain