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 3% of the good units. Data for December 2017 are as follows:

Abnormal spoilage totals ________.
A) 2430 units
B) 8100 units
C) 5913 units
D) 2187 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 3% of the good units. Data for December 2017 are as follows:

Abnormal spoilage totals ________.

Abnormal spoilage totals ________.
A) 2430 units 
B) 8100 units 
C) 5913 units 
D) 2187 units

Quizplus · Accepted Answer

Spoiled units = (22,600 units + 77,000) - (72,900 units + 18,600) = 8100 units
Normal spoilage = 3% × 72,900 units = 2187 spoiled units
Abnormal spoilage = 8100 units - 2187 units = 5913 units

Outose Concept Manufactures Small Tables in Its Processing Department