Share
Explore BrainMass

Solve Using the Weighted Average Method

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 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.

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 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:

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 $98000
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

Management would like some additional information about Cooperative San José's operations.

Requirement 1:
What were the equivalent units for the month?

Requirement 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.

Requirement 3:
How many of the units transferred to the next department were started and completed during the month?

Requirement 4:
The manager of the Mixing Department stated, "Material prices jumped from about $2.50 per unit in March to $3.00 per unit in April, but due to good cost control I was able to hold our materials cost to less than $3.00 per unit for the month." Should this manager be rewarded for good cost control? Explain.

Solution Preview

Please see the attachment for requirements 1 through to 3.

Requirement 4:
The manager should not be rewarded. ...

Solution Summary

This solution provides a detailed analysis which illustrates how to solve for each of the four requirements related to this problem. Requirements 1 through 3 are completed in an attached Excel file and requirement 4 has been completed in the accompanying text box.

$2.19