James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the equivalent units for conversion costs?
A)1,790 units.
B)1,800 units.
C)1,900 units.
D)2,090 units. 1,700 + 200 + 100 + (.3 x 300)= 2,090

Question

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1". 
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the equivalent units for conversion costs?
A)1,790 units. 
B)1,800 units. 
C)1,900 units. 
D)2,090 units. 1,700 + 200 + 100 + (.3 x 300)= 2,090

Quizplus · Accepted Answer

The equivalent units for conversion costs can be calculated as:
Units started during the period: 1,700
Plus equivalent units from beginning work in process: 200
Total equivalent units: 1,900
Plus abnormal spoilage: 10% of units completed and transferred out (0.3 x 300) = 90
Total equivalent units for conversion costs: 1,900 + 90 = 2,090. Therefore, the correct answer is D (2,090 units).

James Automotive Group Is a Maker of Engines for High