Question

Vista manufactures tables at its factory plant in Milano. Direct materials are added at the beginning of the production cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 3% of the good units. Data for December 2018 are as follows: WIP, beginning inventory 22,700 units Direct materials (100% complete) Conversion costs (80% complete) Started during December 76,300 units Completed and transferred out 72,100 units WIP, ending inventory 18,100 units Direct materials (100% complete) Conversion costs (60% complete) Costs for December: $450,000 n$8,000 $500,000 WIP, beginning Inventory: Direct materials Conversion costs Direct materials added Conversion costs added $151,000 $76,900 $231,400 $294,000 College of Business and Economics ACCT 401 – Advanced Managerial Accounting Spring 2020 (a) Compute the normal and abnormal spoilage in units. (b) Compute equivalent units for direct materials and conversion costs. (c) Calculate the cost per equivalent unit for direct materials and conversion costs. (Round the cost per unit calculation to the nearest cent; two decimals). (d) Assign costs to units completed and transferred out; to abnormal spoilage, and to units in ending work-in-process inventory.

Answer 1

Solution:-

A.Calculation of normal and abnormal spoilage in units:-

B.Computation of equivalent units for direct materials and conversion costs:-

C. Calculation cost per equivalent unit for direct materials and conversion costs.

D. Assign costs to units completed and transferred out; to abnormal spoilage, and to units in ending work-in-process inventory:-

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