Question

Great Kraft Mart 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. Spoiled units are identified when inspection occurs and disposed off at zero value. Relevant data are provided below:
Inspection occurs when the units are 50% complete         
Normal spoilage equals 5% of the good units     
                      
Production and cost data for December are provided below:       
                      
WIP, beginning inventory on December 1st   30,000 units       
% completion of DM   100%         
% completion of Conversion    55%         
                      
Started during December   70,000 units       
Completed and transferred out good units during December 77,000 units       
                      
WIP, ending inventory on December 31st   16,000 units       
% completion of DM   100%         
% completion of Conversion    60%         
                      
Costs incurred during the month of December             
Direct materials cost   $200,000         
Conversion cost   $280,000         
                      
Cost of beginning WIP inventory as of December 1st             
Direct materials cost   $100,000         
Conversion costs   $80,400         
                      
Great Kraft Mart uses weighted-average method of process costing   

Required:                   
a) What is the number of normal and abnormal spoiled units in December?         
b) What are the equivalent units of DM and CC for the month of December under Weighted average method?   
c) What is the total cost per equivalent unit?             
d) What cost is allocated to the abnormal spoilage units?           
e) What is the cost allocated to the completed and transferred out units?         
f) What is the cost assigned to the ending WIP?             
g) Record the journal entry for recognizing the abnormal spoilage in December.

Answer 1

Dear student, we cannot able to post solution more than four sub-parts of the question as per our policy.

Answer

Part 1
Number of normal spoiled units	3850
Number of abnormal spoiled units	3150
Part 2
Equivalent units of DM	100000
Equivalent units of CC	90100
Part 3
Total cost per equivalent unit	$       7.00
Part 4
Cost is allocated to the abnormal spoilage units	15,750

Calculaton