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Great Kraft Mart manufactures small tables in its Processing Department. Direct materials are added at the...

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                          25,000   units                                  

% completion of DM                      100%                                                

% completion of Conversion                        60%                                                                                               

Started during December                             75,000   units                                  

Completed and transferred out good units during December           76,000   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                     $225,000                                                        

Conversion cost               $278,000                                                        

Cost of beginning WIP inventory as of December 1st                                                                                   

Direct materials cost                     $125,000                                                        

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.     

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ekkarill92 answered 1 year ago
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