Tong, Inc. is a manufacturing company that uses a process costing system. All direct material is added at the start of the process, and spoilage is discovered at the end. During the first period of operations 15,000 units of material were placed into production at a cost of $20 each (ignore conversion costs for this process). Ending work in process was 2,000 units, good units completed totalled 11,000 units, and normal spoilage is 15% of the units surviving inspection. Inspection takes place after the units are completed.
The unit cost assigned to the normal spoilage is:
A) $-0-
B) $22.61
C) $20.00
D) $24.00

Question

Quizplus · Accepted Answer

Since all direct material is added at the start of the process, the cost of normal spoilage is the same as the cost of the material added, which is $20 per unit. Spoilage discovered at the end doesn't change the initial cost per unit.

Tong, Inc Is a Manufacturing Company That Uses a Process Costing