1) McKay Company uses process costing. The company started with 2,000 units in beginning inventory. There...

1) McKay Company uses process costing. The company started with 2,000 units in beginning inventory. There were 15,000 new units started during the month. 14,000 units were transferred out and 2,800 units remained in ending inventory. McKay’s normal spoilage rate is 1%. The cost per equivalent unit for the month was $20. How much should be charged to the Loss from Abnormal Spoilage account?

2) McNutt uses job-order costing. Job 725 had total costs of $15,000. 1,000 units were produced but 100 of them didn’t pass the quality control tests. They could be sold as seconds for $600 cash. The spoilage was specifically related to the technical specifications of the job. It was not considered abnormal spoilage. What was the final cost per unit transferred to finished goods for Job 725? (Enter with two decimals.)

Expert Solution

)Abnormal Spilage

Units to be accounted for	Phycal units
Units in the beginning WIP inventory	2000
Units started during the period	15000
Total units to be accounted for	17000

Units accounted for	Physical unit
Units completed and transferred out	14000
Units in ending WIP inventory	2800
Normal spoilage(0.01*(17000-2800))	142
Abnormal spoilage(17000-14000-2800-142)	58
Total units accounted for	17000

Amount to be charged to the Loss from Abnormal Spoilage account=58*20=$1,160

2.) Units produced=1000

Acceptable units=(1000-100)=900

Total Costs=$15,000

Credit for spoiled units=$600

Net cost for 900 units=(15000-600)=$14,400

Final Cost per unit=14400/900=$16

ekkarill92 answered 1 year ago

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