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 5% of the good units.Data for December 2017 are as follows:

Costs for December:

What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

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 5% of the good units.Data for December 2017 are as follows:

Costs for December:

What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Costs for December:

What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Quizplus · Accepted Answer

Spoiled units = (22,300 units + 76,400)- (72,900 units + 19,000)= 6800 units
Normal spoilage = 5% × 72,900 units = 3645 spoiled units
Abnormal spoilage = 6800 units - 3645 units = 3155 units
 11ea8a5a_a065_b0c1_a19c_f971e37a2781_TB5540_00_TB5540_00_TB5540_00 * Equivalent unit calculations:
Direct Materials: 22,300 + 76,400 = 98,700 units
Conversion Costs: 72,900 + (19,000 x 60%)+ 6800 = 91,100 units
Total cost per equivalent unit = $3.85 + $4.13 = $7.98
3155 units × $7.98 = $25,177

Outose Concept Manufactures Small Tables in Its Processing Department