Starbright Ltd.manufactures sun roof kits.All direct materials are included at the inception of the production process.For June there were 1,500 units in beginning inventory with a direct material cost of $225,000.Direct materials totalled $3,100,000 for the month.Work-in-process records revealed that 20,000 sun roof kits were started in June and that 18,000 were finished.Normal spoilage of 2 percent of units finished was incurred.Ending work-in-process units are complete in respect to direct materials costs.Spoilage is not detected until the process is complete.Starbright Ltd.uses the weighted-average method.Required:
a.What are the costs assigned to completed units when spoilage units are recognized and when they are not recognized in the cost per equivalent unit?
b.What are the costs transferred out if spoilage units are recognized and if they are ignored?
c.What are the amounts allocated to the work-in-process ending inventory when spoilage units are recognized and when spoilage units are ignored?

Question

Quizplus · Accepted Answer

The Answer of Starbright Ltd.manufactures sun roof kits.All direct materials are included at the inception of the production process.For June there were 1,500 units in beginning inventory with a direct material cost of $225,000.Direct materials totalled $3,100,000 for the month.Work-in-process records revealed that 20,000 sun roof kits were started in June and that 18,000 were finished.Normal spoilage of 2 percent of units finished was incurred.Ending work-in-process units are complete in respect to direct materials costs.Spoilage is not detected until the process is complete.Starbright Ltd.uses the weighted-average method.Required:
a.What are the costs assigned to completed units when spoilage units are recognized and when they are not recognized in the cost per equivalent unit?
b.What are the costs transferred out if spoilage units are recognized and if they are ignored?
c.What are the amounts allocated to the work-in-process ending inventory when spoilage units are recognized and when spoilage units are ignored?