Question

Inter Manufacturing Company manufactures expensive chairs. The following data relates to January 20x1.
Beginning Work in Process (1-1-x1) (BWIP)	3,000		Units
Added during the month	13,000		Units
Completed and transferred out (CTO)	14,000		Units
Ending Work in Process (31-1-x1) (EWIP)	2,000		Units
Percentage of completion of conversion costs for BWIP & EWIP	80%
Costs added during January
	Total costs		Material costs
Beginning Work in Process (1-1-x1)	$60,000		$32,000
Costs added during January	$280,000		$135,000
Inter uses First In First Out (FIFO), and materials are added at the beginning of the process.
The inspection point, for spoilage units, occurs at the end of the production process
Spoilage is considered abnormal if it is greater than		2%	of CTO

Find normal spoilage and abnormal spoilage in units, total costs of CTO, and total cost of EWIP.

Answer 1

Input	Particulars	Phy units	Mat. Costs	Conv. Costs	Total
3000	Beg WIP	3000	0	600
13000	Started & Completed units	11000	11000	11000
	Transferred out (CTO)	14000	11000	11600
	Normal spoilage	0
	Abnormal spoilage	0
	End WIP	2000	2000	1600
16000	Equivalent units		13000	13200
	Costs incurred		135000	145000
	Cost per Eq unit		10.38	10.98
	Total Cost of Beg WIP:
	Beg cost		32000	28000	60000
	add: during Jan		0	6591	6591
	Total Cost of Beg WIP		32000	34591	66591
	Cost of Started & Completed		114231	120833	235064
	Cost of Normal spoilage	280	2908	3076	5983
	Cost of Transferred out (CTO)		149138	158500	307638
	Cost of ending WIP	1720	17862	18894	36755
	REQUIREMENT:
	Normal spoilage, units	280
	Abnormal spoilage, units	0
	Cost of CTO, $	307638
	Cost of Ending WIP, $	36755