Use the information below to answer the following question(s).Waldorf Computer Systems, Inc.manufactures computer memory cards, and uses process-costing.All direct materials are added at the inception of the production process.The accounting department noted that there was no beginning inventory for January.Direct Materials purchases totalled $150,000 during the month.Work-in-process records revealed that 7,500 cards were started in January, 4,500 cards were complete, and 1,500 units were spoiled as expected.Ending work-in-process units are complete in respect to direct materials costs.Inspection occurs at the end of the process.
-At Waldorf Computer Systems Inc.what amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized in the equivalent unit calculation, and that they are ignored, respectively?
A)$27,500; $30,000
B)$30,000; $34,250
C)$30,000; $37,500
D)$37,500; $40,000
E)$30,000; $40,000

Question

Quizplus · Accepted Answer

When spoilage is recognized, the cost is spread over completed and spoiled units, resulting in $30,000 for ending WIP. Ignoring spoilage, the cost is spread over all units started, resulting in $37,500 for ending WIP.

Use the Information Below to Answer the Following Question(s)