Page 7 THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BE

Page 7 THE FOLLOWING INFORMATION APPLIES TO THE QUESTIONS BELOW. Craft Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly hroughout the production cycle. Before inspection, some units are spoiled due to nondetectib le materials defects. Inspection occurs when units are 508 converted Spoiled unitsgenerally constitute 5% of the good units. Data for December 20x3 are as follows: , WIP, beginning Direct materials (100% complete) Conversion costs (75% complete) inventory 12/1/20x3 10,000 units Started during December Completed and transferred out 12/31/20x3 WIP, ending inventory 12/31/20x3 40,000 units 38,400 units 8,000 units Direct materials (100% complete) conversion costs (65% complete) Costs for December: Direct materials Conversion costs Direct materials added Conversion costs added $ 50,000 30,000 100,000 140,000 21. What is the number of total spoiled units? a. 1,600 units b. 2,000 units 2,700 units 3, 600 units 22. Abnormal spoilage totals a. 1,600 units b. 2,000 units. 1, 680 units. d, 1,920 units. 23. What is the total cost per equivalent unit using the weighted-average method of process costing? a. $3.00 b. $3.60 . $6.74 d. $4.60 24. What cost is allocated to abnormal spoilage using the weighted-average process-costing method? a. $0 b. $7,360 c. $8,182 d. $16,400

Solution

23. C 6.74

Working Note

24. A 0

Note: Abnormal cost is not addedd to the product cost but instead shown in the profit & loss Account as a expense. So its apportioned value will be zero.

Statement of Equivalent units
Particulars	Units	Particulars	Units	Material	wages
				% Complete	Equivalent units	% Complete	Equivalent units
Opening WIP	10000	Completed	38400	100	38400	100	38400
Unit introduce	40000	Closing WIP	8000	100	8000	65	5200
		Normal spoilage	1920	100	1920	100	1920
		Abormal Spoilage	1680
	50000		50000		48320		45520