Outose 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 throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 4% of the good units. Data for December 2017 are as follows:

Normal spoilage totals ________.
A) 3180 units
B) 6800 units
C) 2908 units
D) 3892 units

Question

Outose 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 throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 4% of the good units. Data for December 2017 are as follows:

Normal spoilage totals ________.

Normal spoilage totals ________.
A) 3180 units 
B) 6800 units 
C) 2908 units 
D) 3892 units

Quizplus · Accepted Answer

Normal spoilage = 4% × 72,700 units = 2908 spoiled units

Outose Concept Manufactures Small Tables in Its Processing Department