Question

Craft 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 nondetectible materials defects. Inspection occurs when units are 100% converted. Spoiled units generally constitute 5% of the good units. Data for December 2019 are as follows:

WIP, beginning inventory 12/1/2019                 20,000 units

      Direct materials (100% complete)

      Conversion costs (75% complete)

Started during December                                    80,000 units

Completed and transferred out 12/31/2019        76,800 units

WIP, ending inventory 12/31/2019                     16,000 units

      Direct materials (100% complete)

      Conversion costs (65% complete)

Costs for December:

      WIP, beginning Inventory:

            Direct materials                                          $ 100,000

            Conversion costs                                              60,000

      Direct materials added                                         200,000

      Conversion costs added                                       280,000

1. Abnormal spoilage totals?

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

3. What are the amounts of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method?

Answer 1

Craft Concept
Processing Department production Report
Weighted average Method
Month ended December 31
Summary of Physical units
Units in beginning WIP inventory			20,000
Units started during month			80,000
Total unit to be accounted for			100000
Normal spoilage (76800*5%)			3840
Abnormal spoilage (100000-16000-76800-3840)			3360
Units completed and transferred out			76,800
Units in ending WIP inventory			16,000
Total unit accounted for			100000
Equivalent Units of production
Particulars	Physical units	Direct material	Conversion Cost
%	units	%	units
units in beginning WIP inventory	20000	100%	20000	100%	20000
Normal spoilage	3840	100%	3840	100%	3840
Abnormal spoilage	3360	100%	3360	100%	3360
Units in Started and completed (76800-20000)	56800	100%	56800	100%	56800
units in ending WIP inventory	16000	100%	16000	65%	10400
Equivalent Units of production			100000		94400
Summary of cost to be accounted
	Direct material	Conversion Cost	Total
Cost in beginning WIP	$        100,000	$          60,000	$      160,000
Cost incurred during Month (Add)	$        200,000	$        280,000	$      480,000
total cost to be accounted for	$        300,000	$        340,000	$      640,000
cost per Equivalent Unit
total cost to be accounted for	300000	340000
Divided by: Equivalent Units of production	100000	94400
Cost per Equivalent Unit	$        3.00000	$        3.60169	$      6.60169
Assign costs to units transferred out and units in ending WIP inventory
cost assigned to units transferred out
units completed and transferred out	76800	76800
Cost per Equivalent Unit	3.00000	3.60169
cost assigned to units transferred out	230400	276610	507010
Normal spoilage
units completed and transferred out	3840	3840
Cost per Equivalent Unit	3.00000	3.60169
Normal spoilage	11520	13830	25,350
Work done to the date (cost assigned to units transferred out + Normal spoilage)	241920	290440	532,360
Abnormal spoilage
units completed and transferred out	3360	3360
Cost per Equivalent Unit	3.00000	3.60169
Abnormal spoilage	10080	12102	22,182
cost assigned to units ending work in progress
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