Question

Table 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 undetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 8% of the good units. Data for December 2018 are as follows:

WIP, beginning inventory 12/1/2018              20,000 units

      Direct materials (100% complete)

      Conversion costs (75% complete)

Started during December                                80,000 units

Completed and transferred out 12/31/2018   76,400 units

WIP, ending inventory 12/31/2018                 15,000 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) What is the number of total spoiled units?

A) 8,600 units

B) 4,000 units

C) 5,400 units

D) 7,200 units

2) Normal spoilage totals:

A) 3,200 units

B) 6,112 units

C) 3,840 units

D) 5,400 units

3) Abnormal spoilage totals:

A) 3,200 units

B) 4,000 units

C) 3,360 units

D) 2,488 units

Answer 1