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PROBLEM 4-25 Interpreting a Production Report-Weighted-Average Method [LO2, LO3, L04] Cooperative San Jos of southern Sonora state in Mexico makes a unique syrup using
PROBLEM 4-25 Interpreting a Production Report-Weighted-Average Method [LO2, LO3, L04] 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 for use in desserts. The bottles are sold for $12 each. (The Mexican currency is the peso and is 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 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: Quantity Schedule Units to be accounted for: Work in process, April 1 (materials 90% complete; conversion 80% complete) Started into production 30,000 200,000 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 Total Cost 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 Reconciliation Cost accounted for as follows: Transferred to next department Work in process, April 30 $805,600 119,400 Total cost accounted for $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. 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; 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 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 own- ers, 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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