Answer the following questions using the information below:
Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish fillets for distribution to its retail sales department.Direct materials are added at the initiation of the cycle.Conversion costs are incurred evenly throughout the production cycle.Before inspection, some fillets are spoiled due to nondetectible defects.Inspection occurs when units are 50% converted.Spoiled fillets generally constitute 3.5% of the good fillets.Data for April 2018 are as follows:
Costs for April:

-What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

Question

Answer the following questions using the information below:
Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish fillets for distribution to its retail sales department.Direct materials are added at the initiation of the cycle.Conversion costs are incurred evenly throughout the production cycle.Before inspection, some fillets are spoiled due to nondetectible defects.Inspection occurs when units are 50% converted.Spoiled fillets generally constitute 3.5% of the good fillets.Data for April 2018 are as follows:
  Costs for April:
 
-What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

Quizplus · Accepted Answer

Under the weighted-average process-costing method, the cost per equivalent unit is calculated by dividing the total cost to account for (materials, labor, and overhead) by the total equivalent units.

Total good fillets = Units transferred out + Ending work in process - Beginning work in process
Total good fillets = 8,000 + 2,000 - 4,000 = 6,000

Total equivalent units = Units transferred out + (Ending work in process x % completed)
Total equivalent units = 8,000 + (2,000 x 0.5) = 9,000

Total cost to account for = Direct materials + Conversion costs
Total cost to account for = $120,000 + $160,000 = $280,000

Cost per equivalent unit = Total cost to account for / Total equivalent units
Cost per equivalent unit = $280,000 / 9,000 = $31.11

Abnormal spoilage costs are separate from normal spoilage costs and are expensed as a period cost. Therefore, the cost allocated to abnormal spoilage using the weighted-average process-costing method is $0.

Total cost of normal good fillets = Cost per equivalent unit x Total good fillets
Total cost of normal good fillets = $31.11 x 6,000 = $186,660

Total cost of spoiled fillets = Total cost to account for - Total cost of normal good fillets
Total cost of spoiled fillets = $280,000 - $186,660 = $93,340

Abnormal spoilage costs are not taken into account in the calculation of equivalent units or cost per equivalent unit, so the answer is B) $26,880, which is the total cost of spoiled fillets after subtracting the normal spoilage cost.

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